U.S. growth slowed more than expected near the end of 2025 as the government shutdown impacted spending and investment, while a key inflation metric showed high prices are still a factor for the economy, according to data released Friday.
Gross domestic produce rose at an annualized rate of just 1.4%, according to the Commerce Department, well below the Dow Jones estimate for a 2.5% gain.
Consumer spending rose at a slower pace for the period while government spending tumbled sharply in a quarter marked by the record-length shutdown. The department estimated that the shutdown subtracted about 1 percentage point from growth, though it added that the exact impacts "cannot be quantified."
For the full year in 2025, the U.S. economy grew at a 2.2% pace, down from the 2.8% increase in 2024.
At the same time, inflation held firm in December, according to the gauge most closely watched by Fed officials.
The core personal consumption expenditures price index, which excludes food and energy, rose 3% in December, according to a separate release. That matched the consensus forecast but kept the pivotal inflation measure well above the Fed's 2% target.
On a headline basis, the PCE index accelerated 2.9%, or 0.1 percentage point higher than expected.
Both indexes rose 0.4% for the month, compared to the respective forecasts for 0.3%.
Just prior to the data release, President Donald Trump warned that the GDP number would be soft, blaming it on the government shutdown that ended in November.
"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!" Trump said in aTruth Social post. "Also, LOWER INTEREST RATES. "Two Late" Powell is the WORST!!!"
Source: Drudge Report
