According to preliminary estimates from the Bureau of Economic Analysis (BEA), the U.S. economy recorded GDP growth of 1.4 % on an annualized basis over the period October–December 2025, compared with 4.4 % in the previous quarter and far below analysts’ forecasts, which had expected around 2.8 % to 3 % growth.
This figure reflects a marked deceleration, largely attributed to the economic impact of a 43‑day federal shutdown, the longest in recent U.S. history, which paralyzed part of the administration and significantly reduced public spending.
Growth Headwinds: Shutdown and Spending
The impact of the shutdown is felt at multiple levels: services provided by federal employees dropped, federal expenditures on goods and services collapsed, and temporary social programs were reduced, which is estimated to have subtracted nearly one percentage point from quarterly GDP growth.
At the same time, household consumption — the traditional driver of the U.S. economy — slowed, with a limited increase of about 2.2 %, compared with 3.5 % in the previous quarter. This moderation reflects a heightened climate of uncertainty among consumers.
Over the whole of 2025, the U.S. economy nevertheless recorded positive growth of about 2.2 %, slightly below 2024 (2.8 %) but still moderate.
Labor markets remain relatively strong, with an unemployment rate around 4.3 %, but job creation was weaker than expected. Fewer than 200,000 jobs were added in 2025, a historically low number outside of pandemic periods.
Inflation and monetary policy remain another focus. The Core PCE Consumer Price Index — the inflation measure preferred by the Federal Reserve — was around 3 % in December, above the Fed’s 2 % target, complicating prospects for interest rate cuts despite the economic slowdown.
Slowed Growth on One Hand, Persistent Inflation on the Other
For economists, this sharp slowdown illustrates both the vulnerability of the U.S. economy to political disruptions and the complexity of the current cycle: slowed growth on one hand, yet persistent inflation on the other.
Some analysts believe the economy could rebound in 2026 with the full resumption of public spending and fiscal measures aimed at supporting demand. Others warn of fragile consumer confidence, with sentiment indices at low levels that could restrain consumption in the future.
On financial markets, the GDP announcement triggered mixed reactions: stock indices opened lower as investors reassessed the likelihood of new monetary support measures in the face of inflation remaining above target.
A Strong Signal of Economic Slowdown
The slowdown of U.S. GDP to 1.4 % in Q4 2025 is a strong signal of economic deceleration at the end of the year. While it does not mark a technical recession, it highlights structural weaknesses, dependence on public policies, and persistent challenges in consumption and investment. The shutdown, in particular, appears as an amplifying factor of this slowdown, whose effects could ease if household and business confidence stabilizes in 2026.
What Is a Federal Shutdown?
In the United States, a shutdown occurs when Congress and the President fail to pass the budget or necessary funding on time. As a consequence, part of the federal government ceases its activities.
- Services closed or reduced: national parks, administrative offices, non‑essential agencies.
- Federal employees affected: those in non-essential services are placed on unpaid leave (furlough), while critical functions (security, health, justice) continue.
- Economic impact: reduction in public spending, disruption of social programs, administrative delays, and negative effects on household consumption and confidence.
The 2025 shutdown, the longest in recent U.S. history (43 days), strongly slowed the U.S. economy, contributing to weak GDP growth in the fourth quarter.