US economy grew at half the expected rate in the final quarter of 2025 due to tariffs and government shutdown

The U.S. Economy slowed down at the end of last year. Economic activity grew by 0.7% in the fourth quarter, which is half of what the Bureau of Economic Analysis (BEA) had initially estimated. This downward revision of the 2025 Q4 GDP also reduced the annual growth rate by one‑tenth, bringing it to 2.1%.

This updated figure allows for comparison between the economic performance under Donald Trump’s current term and that of his predecessor, Joe Biden. In 2024, Biden’s final year in office, GDP grew 2.8%, which is seven‑tenths higher than the growth recorded last year — Trump’s first year back in the White House during his second term.

“Real GDP was revised down 0.7 percentage point from the advance estimate, reflecting downward revisions to exports, consumer spending, government spending, and investment. Imports decreased less than previously estimated,” the BEA noted.

The statistical office’s own analysis acknowledges that the tariffs slowed down foreign trade. Last year, the Trump administration disrupted global trade rules by indiscriminately imposing tariffs on all his allies based on arbitrary criteria.

Furthermore, the last quarter of the year was impacted by the longest federal government shutdown in history. For 43 days, hundreds of government agencies were left without funding, and hundreds of thousands of public employees went unpaid because agreement Republicans and Democrats were unable to reach an agreement to extend budget legislation.

“Compared to the third quarter, the deceleration in real GDP in the fourth quarter reflected downturns in government spending and exports and a deceleration in consumer spending that were partly offset by an acceleration in investment. The decrease in imports was smaller than in the previous quarter,” said the BEA.

Despite the challenges, U.S. Economic growth was supported by stronger consumer spending and increased investment, driven in part by the large amounts of funding in artificial intelligence. “These movements were partly offset by decreases in government spending and exports. Imports, which are a subtraction in the calculation of GDP, decreased,” said the BEA.

Separately, U.S. Consumer spending remained flat in January after weaker‑than‑expected economic growth.

Consumer spending, adjusted for inflation, rose just 0.1% from the previous month, according to data released Friday by the BEA. The core personal consumption expenditures price index, which excludes food and energy and is the Federal Reserve’s preferred inflation measure, increased by a solid 0.4%.

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