US economy grew sluggish 0.5% in fourth quarter, says govt; downgrading previous estimate

The American economy, slowed by last fall’s 43-day government shutdown, grew at a sluggish 0.5 per cent annual pace from October through December, the Commerce Department reported Thursday in downgrade of its previous estimate.

US gross domestic — the nation’s output of goods and services — decelerated in the fourth quarter after registering impressive growth of 4.4 per cent from July through September and 3.8 per cent from April through June.

The latest number was marked down from the Commerce Department’s previous estimate of 0.7 per cent fourth-quarter growth.

Federal government spending and investment fell at a 16.6 per cent annual pace because of the shutdown, lopping 1.16 percentage points off fourth-quarter GDP growth. Consumer spending expanded at a 1.9 per cent pace, down a notch from the previous estimate and from 3.5 per cent in the second quarter.

For all of 2025, the economy grew 2.1 per cent last year, slower than 2.8 per cent in 2024 and 2.9 per cent in 2023.

The economic outlook for this year is hazy after the US-Israeli war with Iran drove up energy prices and disrupted global commerce.

America’s job market slumped last year — recording the weakest hiring outside a recession since 2002 — but has been up and down so far in 2026: Employers added a healthy 1,60,000 jobs in January, slashed 1,33,000 in February, then created a surprising 1,78,000 in March.

Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP. The first look at January-March economic growth is due April 30.