US economy grew just 0.7% in Oct-Dec quarter — far lower than initial estimate

The US economy grew just 0.7 per cent in the fourth quarter (October-December), far lower than the initial estimate of 1.4 per cent, according to revised data.

The figures have come as a shock as economists had expected revised figures to show higher growth — not half of the initial estimate.

The Q4 growth was also sharply down from 4.4 per cent in the third quarter.

Overall, the economy grew 2.1 per cent, down than the initial estimate of 2.2 per cent and far lower than the 2.9 per cent of 2024.

These poor figures paint a troubling picture of the US economy that’s
reeling under sluggish growth and falling employment. As the economy was already performing poorly before President Donald Trump launched the war on Iran, the picture could get worse because of rising fuel prices and trade disruption.

Despite Trump’s campaign promise of reviving jobs growth, particularly in the manufacturing sector, the situation has actually worsened.

Under Trump, the economy added fewer than 10,000 jobs a month — the worst year outside recession years since 2002.

Last month,
the US economy lost 92,000 jobs — a shocking finding as economists had projected an addition of 59,000 jobs, not a loss of jobs.

Despite the promise of revival, the manufacturing sector has taken a beating under Trump. Since he imposed sweeping tariffs last year,
American factories have lost 72,000 jobs, according to an analysis from The Washington Post.

In further signs of troubles, consumer spending growth fell to 2 per cent in the fourth quarter from 3.5 per cent of the previous quarter.

While business investment, excluding housing, grew at a healthy 2.2 per cent, it was still way lower than the initial estimate of 3.7 per cent and 3.2 per cent in the previous quarter. Moreover, the 2.2 per cent investment growth could be a false hope as much of that investment could be concentrated in just the artificial intelligence (AI) sector that is experiencing an ongoing boom.

I write on international affairs and India’s foreign policy. I am a compulsive reader, occasional book reviewer, and an aspiring tea connoisseur. I tweet with @madhur_mrt handle on X. You can drop me tips at madhur.sharma@nw18.com. I am open to reading your feedback, or heeding Netflix recommendations. I have previously written for Outlook magazine, covering Indian politics, domestic policy, and law.
see more