San Francisco Frontiers - US GDP growth misses expectations as Trump blames shutdown

The Republican leader was quick to blame a lengthy government shutdown last year for the deceleration in growth, pinning the responsibility on Democratic lawmakers in a social media post right before the latest data was released.

The world's biggest economy expanded at a 1.4 percent annual rate in the October to December period last year, the Department of Commerce said.

This was significantly below the 2.5 percent pace that analysts had forecasted for the quarter.

Full-year GDP growth, in turn, came in at 2.2 percent in 2025, lower than the 2.8 percent figure for the prior year.

"The Democrat Shutdown cost the U.S.A. at least two points in GDP," Trump wrote in an angry Truth Social post, about a half-hour before the official results were released.

He also pointed the finger again at the Federal Reserve, bashing outgoing Chairman Jerome Powell and calling for "LOWER INTEREST RATES."

Analysts generally expect any hit to economic growth from the record-long shutdown, which lasted from October to mid-November, to be temporary.

On Friday, the Commerce Department said that the slower fourth quarter growth "reflected downturns in government spending and exports and a deceleration in consumer spending."

This was partially offset by a pick-up in investments, the report added.

The fourth quarter figure was a marked slowdown from the 4.4 percent growth seen in the July to September window.

The report noted that the economy overall saw a boost from consumer spending and investment in the year.

The US economy has grown at a solid pace in recent months, driven by consumption as households kept spending despite the squeeze from stubborn inflation and a weaker jobs market.

But many Americans, particularly from middle- and lower-income households, have become more conscious of prices, turning increasingly to warehouse stores as they tighten their budgets.

While artificial intelligence investments and spending by well-off families have powered the robust economic growth, it remains unclear if most households will feel uplifted by this boom.

On Friday, a separate government report showed that the Federal Reserve's preferred measure of inflation picked up a touch more than analysts expected as well.

The personal consumption expenditures (PCE) price index was up 2.9 percent from a year ago in December, higher than the 2.8 percent that economists anticipated and also above November's figure.

I.Wright--SFF