The US economy significantly decelerated in the last quarter of 2025. Gross Domestic Product increased by just 1.4% on an annualized basis, a result well below market forecasts of 3%. The prolonged paralysis of the federal administration primarily impacted the condition of the world's largest economy. Simultaneously, accelerating core PCE inflation limits the Federal Reserve's room for maneuver regarding potential interest rate cuts.

Disappointing GDP Growth

The US economy grew by 1.4% in the last quarter of 2025, a value half the size of the market consensus of 3%.

Costly Government Paralysis

The prolonged federal administration shutdown subtracted about 1 percentage point from the overall GDP result, hampering government spending and investments.

Inflation Above Forecasts

The core PCE index rose by 0.4% month-on-month in December, indicating difficulties in achieving the Fed's 2% inflation target.

Poland's Trade Deficit

Poland closed 2025 with a negative trade balance of 7.7 billion euros, the first such case in two years.

US Department of Commerce data for the fourth quarter of 2025 indicates a clear cooling of the economic climate. GDP growth of 1.4% is the weakest result since the pandemic, stemming from the record-long suspension of federal government operations. According to the Bureau of Economic Analysis (BEA), the so-called shutdown reduced growth dynamics by about 1 percentage point. For the entire year 2025, the US economy grew by 2.2%, indicating a slowdown compared to the 2.8% recorded a year earlier. President Donald Trump reacted to these reports by blaming the Democratic Party and the Fed chair. Since 1976, there have been 21 funding gaps for the US government administration, but their impact on GDP is usually temporary, as suspended expenditures are made up in subsequent quarters. The situation is complicated by inflation data. The inflation measure preferred by the Fed, the core PCE index, rose by 0.4% month-on-month in December, exceeding analysts' expectations. Year-on-year, this indicator stood at 3%, pushing back the prospect of monetary policy easing. Investors on Wall Street are reacting cautiously, and these sentiments are also affecting European markets. Despite the overall slowdown, a positive signal remains the still relatively strong private consumption and stability in corporate sector investment. These phenomena coincide with the publication of data from the Polish market. According to analyses by the Polish Economic Institute, Poland recorded its first foreign trade deficit in two years in 2025, amounting to 7.7 billion euros. Although exports grew by almost 4%, import dynamics (over 6%) were higher, driven mainly by supplies from Asian markets. 1.4% — was the annualized US GDP growth rate US GDP - Decline in Growth Dynamics: 2025-Q1: 2.1, 2025-Q2: 2.5, 2025-Q3: 4.4, 2025-Q4: 1.4

Mentioned People

  • Donald Trump — US President blaming the opposition and the central bank for weak economic results.
  • Jerome Powell — Chair of the Board of Governors of the Federal Reserve System (Fed).
  • Scott Bessent — US Treasury Secretary who expressed optimism about growth in 2026.