The US economy significantly decelerated in the last quarter of 2025, achieving GDP growth of 1.4% on an annualized basis. This result proved substantially lower than economists' forecasts, who had expected growth dynamics around 3%. The main restraining factor was a record-long federal government paralysis, which, according to estimates, reduced the growth rate by over one percentage point, despite stable consumer spending.

Sharp Growth Deceleration

GDP growth in Q4 was 1.4%, marking the lowest reading in two years, significantly below the forecasted 3.0%.

Impact of Government Paralysis

A record shutdown of the federal administration subtracted 1.15 percentage points from the overall growth rate, paralyzing public spending.

Inflation Above Target

The core PCE index rose by 0.4%, which may prompt the Fed to maintain higher interest rates for a longer period.

Optimism for the Future

Treasury Secretary Scott Bessent forecasts a return to growth at 3.5% in 2026 thanks to AI technology.

US GDP in the fourth quarter of 2025 increased by just 1.4% on an annualized basis, marking a sharp decline compared to the 4.4% recorded in the previous period. The primary cause is considered to be a record-long shutdown, which led to the suspension of key public services and reduced government spending by 1.15 percentage points in the overall growth calculation. The full-year result for 2025 closed at 2.2%, indicating a weakening of dynamics relative to the 2.8% achieved in 2024. In US history, the longest shutdown occurred at the turn of 2018 and 2019, lasting 35 days, which permanently changed the perception of the impact of budget disputes on the real economy. Despite the negative impact of political factors, experts point to "silver linings" in the latest data. Private consumption and business investments remained relatively resilient to turbulence. An additional pro-growth impulse, counted on by the Donald Trump administration, is the boom in artificial intelligence-related innovations and planned tax cuts. The new Treasury Secretary, Scott Bessent, expressed the ambitious belief that in 2026, the US economy will be able to return to a path of dynamic growth, reaching a level of at least 3.5%. „I believe the US economy can grow by at least 3.5% in 2026, despite the current slowdown caused by extraordinary factors.” — Scott Bessent Simultaneously with the GDP data, indicators concerning inflation and the real estate market were published. The core PCE price index, closely watched by the Federal Reserve (Fed), rose by 0.4% on a monthly basis, exceeding market expectations and complicating the prospect of rapid interest rate cuts. Meanwhile, the primary real estate market recorded a 1.7% decline in sales in December, suggesting that high borrowing costs and political uncertainty are beginning to tangibly affect the purchasing decisions of American families. The Federal Reserve System, serving as the US central bank, was established in 1913 to ensure financial system stability and mitigate economic cycles.

Mentioned People

  • Scott Bessent — US Treasury Secretary, responsible for fiscal policy and economic forecasts.
  • Donald Trump — President of the United States, whose tariff policy and the shutdown influenced economic results.