Economy: The Unexpected Weakness in U.S. Economic Growth

Friday, 13 March 2026, 14:32

Economy insights reveal that U.S. economic growth was much weaker in the final quarter of 2025 than initially projected. The gross domestic product grew at just 0.7%, a significant decline from earlier estimates. As federal spending plummeted due to a government shutdown, the economic outlook has been dimmed by rising inflation and external pressures.

Cbsnews — Economy: The Unexpected Weakness in U.S. Economic Growth

Surprising Economic Growth Data

New government economic data shows that U.S. economic growth was significantly weaker in the final three months of 2025 than previously reported. The nation’s gross domestic product (GDP)—the total value of goods and services produced in the U.S.—expanded at a meager 0.7% annual pace in the fourth quarter, according to the Commerce Department.

Impact of the Government Shutdown

This figure is half the 1.4% growth rate the agency initially estimated last month. For all of 2025, GDP grew at a 2.1% pace, still representing solid growth, yet down from an initial estimate of 2.2% and slower than the 2.8% growth recorded in 2024.

Shutdown effects were dramatic.
Federal spending and investment plunged at a 16.7% rate.
Such a decline hacked 1.16 percentage points off fourth-quarter growth.

Inflationary Pressures

Inflation data released concurrently suggests consumer prices crept higher in January, indicating that costs continued to rise even before the Iran war drove up energy prices. Together, these reports indicate that the economy may not be as resilient to external headwinds—including tariffs that have pushed up prices on certain goods—as previously thought, economists said.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.