US economy slowed to 0.5% growth in fourth quarter

The Commerce Department reported that the US economy grew at just 0.5% in the last three months of 2025, lower than the earlier 0.7% estimate, marking a sharp slowdown from 4.4% in the previous quarter.

The main reason was a 43-day government shutdown. Government spending dropped sharply by 16.6%, pulling down overall growth.

Consumer spending, which drives the economy, rose only 1.9%. Spending on goods like cars and clothes increased just 0.3%, showing people are being careful with money.

Business investment grew 2.4%, helped by spending on new technologies like artificial intelligence, but it also slowed compared to earlier months.

The economy grew 2.1% for the whole of last year, down from 2.8% in 2024 and 2.9% in 2023.

Looking ahead, the outlook is uncertain due to rising energy prices and global tensions. Job growth has also been uneven in early 2026, adding to concerns about the economy.