GDP Comes In Much Weaker Than Expected

Economic momentum took a clear hit at the end of last year, with the record-long government shutdown and a slowdown in consumer spending taking the blame. New data from the Commerce Department shows the US economy expanded at a 1.4% annual rate in the fourth quarter—barely more than half the 2.5% pace economists polled by the Wall Street Journal had projected. That's also down sharply from 4.4% growth in the summer, and 3.8% from the quarter before that, per the AP. Federal spending plunged at a double-digit rate, and an earlier rush by companies to import goods ahead of Trump administration tariffs continued to weigh on the GDP math.

• Bigger picture: Even so, 2025 as a whole marked a rebound from an early-year dip, with solid consumer outlays and heavy investment in artificial intelligence keeping growth positive. Economists surveyed by the Journal see GDP rising 2.2% in 2026, helped by AI spending, tax incentives, and a weaker dollar aiding exporters.
• Trouble looms? Beneath the headline numbers, though, are stress signals: hiring largely stalled last year, January gains were mostly in healthcare, and lower-income shoppers are pulling back. Walmart and Colgate-Palmolive both report more cautious spending and delayed purchases, while consumer confidence has sunk to its lowest point in more than a decade.
• Markets: On Wall Street, investors weren't thrilled with the results. Dow futures fell about 100 points after the report came out, per CNBC.
• Trump: Just before the report's release, President Trump warned the GDP number would be soft, and he blamed Democrats. "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!" he wrote. The president also took aim at Fed chief Jerome Powell: "LOWER INTEREST RATES. 'Two Late' Powell is the WORST!!!"