U.S. Economy Grows at 0.5% in Fourth Quarter, Revised Downward

The U.S. economy grew at a 0.5% annualized rate in the fourth quarter of 2025, according to the Commerce Department’s third and final estimate, a revision from an earlier estimate of 0.7% growth ^[1][2]. This adjustment reflects slower economic activity than initially anticipated.

Federal government spending and investment decreased significantly, falling at a 16.6% annual pace during the fourth quarter. This decline subtracted 1.16 percentage points from the overall GDP growth ^[1]. Despite this, consumer spending showed some resilience, expanding by 1.9%, although this was also a downward revision from prior estimates ^[1].

Spending on goods, such as cars and clothing, grew by a modest 0.3% in the fourth quarter ^[1]. Meanwhile, business investment, excluding housing, increased at a 2.4% pace, indicating some areas of economic strength ^[1].

Underlying GDP growth, which excludes volatile items like exports, inventories, and government spending, grew at a 1.8% rate during the same period ^[1]. For the entire year of 2025, the U.S. economy expanded by 2.1%, a slowdown compared to the 2.8% growth in 2024 and 2.9% in 2023 ^[1].

What Is Known

The Commerce Department’s final estimate confirms a 0.5% growth rate for the fourth quarter of 2025, marking a downgrade from earlier estimates. Federal spending cuts significantly impacted the GDP, while consumer spending and business investment showed mixed results ^[1][2].

What Remains Unclear

As of April 9, 2026, the revised 0.5% growth figure has not been corroborated by a second independent source beyond the Associated Press ^[1]. The broader implications of these economic trends on future quarters remain to be seen.