U.S. Q4 2025 GDP Slows After Shutdown
U.S. Q4 2025 GDP slows as BEA on Feb. 20 said a 43-day federal shutdown subtracted about 1.0 percentage point, prompting traders to reprice policy bets.

KEY TAKEAWAYS
- BEA advance estimate showed real GDP rose 1.4% annualized in Q4 2025.
- A 43-day federal shutdown subtracted about 1.0 percentage point from Q4 growth.
- Advance estimate fell short of consensus near 2.5% to 3.0% and complicates 2026 forecasts.
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U.S. fourth-quarter 2025 GDP, reported by the Bureau of Economic Analysis (BEA) on Feb. 20, slowed sharply from the prior quarter after a 43-day federal shutdown. Weaker government spending offset gains in consumer services and business investment, complicating near-term growth forecasts and monetary-policy expectations.
Fourth-Quarter Growth and Shutdown Impact
The BEA said real gross domestic product rose at a 1.4% annual rate in the fourth quarter, down from 4.4% in the third quarter. Consumer spending led growth, driven by services such as health care and international travel. Business investment also increased, notably in intellectual property (research and development), equipment, and private inventories. These gains were partly offset by declines in government spending and exports. Imports decreased but less than in the previous quarter. Real final sales to private domestic purchasers rose 2.4%, down from 2.9% in the third quarter.
The partial federal government shutdown from Oct. 1 to Nov. 12, 2025, lasting about 43 days, reduced federal nondefense and defense spending and curtailed services provided by federal employees. The BEA estimated this reduction subtracted about 1.0 percentage point from fourth-quarter real GDP growth. Furloughed workers received back pay, so current-dollar compensation was unaffected. The full effects remain embedded in the source data.
Quarterly price measures were mixed. The gross domestic purchases price index rose 3.7%, the personal-consumption-expenditures (PCE) price index increased 2.9%, and core PCE inflation, which excludes food and energy, was 2.7%. For the full year 2025, real GDP grew 2.2%, down from 2.8% in 2024. The gross domestic purchases price index rose 2.6%, while overall and core PCE inflation were 2.6% and 2.8%, respectively.
The BEA postponed the originally scheduled Jan. 29 release and issued the advance estimate at 8:30 a.m. ET on Feb. 20. The figure fell short of consensus forecasts, which had ranged roughly between 2.5% and 3.0%.
Private forecasts for 2026 diverge. One projects about 2.1% year-over-year growth, slightly below 2025’s pace, while another expects growth near 2.7%, roughly half a percentage point above last year. Minutes from central-bank deliberations anticipate solid growth in 2026, with real GDP running above potential through 2028.





