WASHINGTON - US GDP grew by just 1.4 percent annually in the fourth quarter of 2025, according to data released Friday by the Commerce Department, significantly missing analysts' forecasts of a 2.5 percent gain.

The figure also represents a marked deceleration from the 4.4 percent expansion seen in the third quarter, as a federal government shutdown and cooling consumer demand weighed on economic activity.

The data release was delayed by a month due to the government shutdown. The Commerce Department estimated that the shutdown, which ran through the first half of the quarter, likely shaved about 1 percentage point off economic growth.

Year-on-year, the economy expanded at a 2.2 percent pace, down from 2.8 percent in 2024. Key inflation indicators also pointed to persistent high prices, with the widely-watched core personal consumption expenditures price index, excluding food and energy, rising 3 percent in December, well above the Fed's 2 percent target.

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Dean Baker, co-founder of the Center for Economic and Policy Research, told Xinhua that the shutdown and layoffs at the Department of Government Efficiency (DOGE) were major factors behind the weak figures.

Before the report's release, US President Donald Trump warned of soft GDP numbers, blaming the partial government closure that ended in November.

"The Democrat Shutdown cost the U.S.A. at least two points in GDP. That's why they are doing it, in mini form, again. No Shutdowns!" Trump said in a social media post, also criticizing Fed chief Jerome Powell for not lowering interest rates more aggressively.

The central bank had cut its benchmark rate by three-quarters of a percentage point late last year but has since signaled a more cautious approach due to inflation risks.

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Looking ahead, economists are divided on 2026's outlook. Gary Clyde Hufbauer of the Peterson Institute for International Economics forecasts first-quarter GDP around 2 percent and full-year growth at 2.5 percent, with unemployment possibly rising to 4.8 percent from January's 4.3 percent.

Baker expects mid-2 percent growth but cautioned that the outcome depends on tariffs and the performance of the AI sector, warning that a burst AI bubble could drastically alter the picture.

Many analysts believe tech stocks are overvalued due to excessive optimism around AI development.