American Gross Domestic Product grew by 1.4% on an annualized basis in the fourth quarter of 2025, representing a significant slowdown compared to the 4.4% recorded in the previous quarter. This result turned out to be half of what economists surveyed had forecast. The main drag on growth momentum was a record-long paralysis of the federal administration. At the same time, core inflation increased, casting doubt on imminent interest rate cuts by the Federal Reserve.

Disappointing GDP Growth Rate

Growth of 1.4% turned out to be significantly lower than forecasts (3%), mainly due to the paralysis of the federal government.

Acceleration of Core Inflation

The PCE index rose to 0.4% on a monthly basis, forcing the Fed to remain cautious regarding interest rates.

Political Pressure on the Fed

Donald Trump directly attacked Jerome Powell, demanding immediate cuts to the cost of money.

Resilience of the Private Sector

Despite weak GDP, American spending and corporate investments remain at a relatively high level.

The US economy ended 2025 with a result indicating a clear exhaustion of its previous momentum. According to preliminary estimates from the Bureau of Economic Analysis (BEA), GDP grew in the last quarter by 1.4% on an annualized basis (SAAR), while the market expected a reading of around 3%. The full-year economic growth was 2.2%, representing a decline compared to the 2.8% achieved in 2024. The key restraining factor was a shutdown lasting for several weeks of the quarter; some estimates prior to the data release indicated a possible reduction in the growth rate by even 1–2 percentage points on an annualized basis, although the preliminary BEA description suggested an impact closer to about 1 percentage point. The macroeconomic situation is complicated by price data, which suggests the fight against high prices is not yet over. The inflation measure preferred by the Federal Reserve, the core PCE index, rose by 0.4% on a monthly basis in December (compared to 0.2% in November). On an annual basis, this inflation remained at 3%, pushing back the prospect of loosening restrictive monetary policy. President Donald Trump sharply criticized this data, blaming the opposition Democratic Party and the Chairman of the Fed, Jerome Powell, for the slowdown. The mechanism of annualized quarterly growth (SAAR), commonly used in the USA, shows what the growth rate would be for the entire year if the dynamics from a given quarter were maintained for the next three periods. Despite the negative overall data, the economy's fundamentals show some resilience. Consumer spending and business investment remained solid, distinguishing the current situation from a typical recession. However, stagnation in the labor market is concerning — despite GDP growth, employment in key sectors barely budged. However, Treasury Secretary Scott Bessent expressed optimism, forecasting that thanks to investments in artificial intelligence and technology, the US economy could return to a growth rate of 3.5% as early as 2026. 1,4% — US GDP growth in Q4 2025 „The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns! Also, LOWER INTEREST RATES.” (The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns! Also, LOWER INTEREST RATES.) — Donald Trump

Mentioned People

  • Donald Trump — US President, criticizing the Fed and Democrats for economic results.
  • Jerome Powell — Chair of the Board of Governors of the Federal Reserve System.
  • Scott Bessent — US Treasury Secretary, forecasting a strong economic rebound in 2026.