The U.S. economy expanded at a slower pace in the fourth quarter of 2025, with real GDP growing at an annual rate of 1.4%. This marks a sharp slowdown from the 4.4% growth recorded in the third quarter. The deceleration was mainly driven by weaker government spending, lower exports, and slower consumer spending.
The advance estimate released by the U.S. Bureau of Economic Analysis shows that while investment accelerated, it was not enough to offset broader economic softness. The data matters for investors, policymakers, and global markets as it signals moderating economic momentum heading into 2026.
The report was originally scheduled for January 29, 2026, but was delayed due to the October–November 2025 U.S. government shutdown.
What Happened in the U.S. GDP Advance Estimate for Q4 2025
Real gross domestic product increased by 1.4% in the fourth quarter of 2025, according to the advance estimate. This is a significant drop compared to the strong 4.4% expansion in the third quarter.
| Quarter | Real GDP Growth (Annual Rate) |
|---|---|
| Q3 2025 | 4.4% |
| Q4 2025 (Advance Estimate) | 1.4% |
The slowdown shows that the U.S. economy lost momentum toward the end of the year. Growth remained positive, but the pace weakened across multiple sectors.
Why Did U.S. GDP Growth Slow in the Fourth Quarter of 2025
The main reasons behind the slowdown were declines in government spending and exports, along with a noticeable deceleration in consumer spending. These factors reduced overall economic output during the quarter.
However, the report noted that private investment accelerated, which helped partially offset the economic drag. Imports also decreased, but the drop was smaller compared to the previous quarter, which slightly limited the positive contribution to GDP.
| Key GDP Drivers (Q4 2025) | Trend | Impact on Growth |
|---|---|---|
| Consumer Spending | Decelerated | Negative |
| Government Spending | Declined | Negative |
| Exports | Declined | Negative |
| Investment | Accelerated | Positive |
Bigger Context Behind U.S. GDP Growth in Full Year 2025
For the full year 2025, real GDP increased by 2.2%, compared to 2.8% growth in 2024. This indicates a gradual cooling of economic expansion over the year.
The annual growth was primarily supported by strong consumer spending and steady investment activity. Despite the slowdown in the fourth quarter, these two components remained the core pillars of economic growth.
| Year | Real GDP Growth | Main Growth Drivers |
|---|---|---|
| 2024 | 2.8% | Consumption and Investment |
| 2025 | 2.2% | Consumer Spending and Investment |
Inflation Trends in the 2025 GDP and PCE Price Index Data
The price index for gross domestic purchases increased 3.7% in the fourth quarter, up from 3.4% in the third quarter. This shows that inflationary pressures remained slightly elevated.
The Personal Consumption Expenditures (PCE) price index, a key inflation measure used by the Federal Reserve, rose 2.9% in Q4 2025 compared to 2.8% in the previous quarter. Core PCE, which excludes food and energy, increased 2.7%, slightly lower than 2.9% in Q3.
For the full year 2025, the PCE price index rose 2.6%, matching the increase seen in 2024, while core PCE increased 2.8% compared to 2.9% in the prior year.
How the Q4 2025 U.S. GDP Data Affects Markets, Policy, and Global Economy
Slower GDP growth signals that the U.S. economy is entering a more moderate expansion phase. This could influence Federal Reserve policy decisions, especially on interest rates and inflation control.
Financial markets closely track GDP trends because weaker growth may affect corporate earnings, investment flows, and global trade outlook. Emerging markets and export-driven economies are also impacted due to their dependence on U.S. demand.
The cooling in consumer spending is particularly important, as it accounts for a large share of U.S. economic activity. Any sustained slowdown could reduce overall growth momentum in 2026.
What Happens Next in U.S. GDP Estimates and Economic Outlook for 2026
The second estimate of fourth quarter and full-year 2025 GDP will be released on March 13, 2026, at 8:30 a.m. EDT. This updated report may revise growth figures based on more complete data.
Economists will closely watch future revisions, inflation trends, and consumer spending patterns to assess whether the slowdown is temporary or part of a broader economic cooling cycle.
Frequently Asked Questions
Q1: What was the U.S. GDP growth rate in Q4 2025?
The U.S. real GDP grew at an annual rate of 1.4% in the fourth quarter of 2025.
Q2: Why did GDP growth slow in Q4 2025?
The slowdown was mainly due to declines in government spending, exports, and slower consumer spending.
Q3: How much did the U.S. economy grow in 2025?
Real GDP increased 2.2% in 2025, down from 2.8% growth in 2024.
Q4: When is the next U.S. GDP release?
The second estimate for Q4 and full-year 2025 GDP will be released on March 13, 2026.
Conclusion
The advance GDP estimate for Q4 2025 shows that the U.S. economy is still growing but at a slower pace. While investment remains strong, weaker consumer spending and falling exports signal caution. Future revisions and inflation data will be key indicators for economic direction and policy decisions in 2026.
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