US Economy Grew Just 0.7 Percent Last Quarter as Government Shutdown Dragged Down GDP

The US economy expanded at an annual rate of just 0.7 percent in the fourth quarter of 2025, according to the latest estimate from the Bureau of Economic Analysis released on March 13. The figure marks a sharp deceleration from earlier quarters and underscores the fragility of the current economic recovery.

The biggest single factor weighing on growth was the partial government shutdown, which the BEA estimated subtracted 1.16 percentage points from GDP. Without the shutdown's impact, growth would have been closer to historical norms, but the disruption to federal spending and services left a measurable mark on the quarter's output.

For the full year of 2025, the economy grew just 2.1 percent, the weakest annual pace since the pandemic year of 2020. The slowdown has prompted renewed debate among economists about whether the US is heading toward a more prolonged period of sluggish growth.

Adding to the pressure, Friday's employment report showed job losses of 92,000 in February, with prior months revised downward. The unemployment rate for US-born workers has climbed to 4.7 percent from 4.4 percent a year ago, suggesting a labor market that is cooling more than headline numbers might indicate.

Consumer spending, which drives roughly two-thirds of US economic activity, is showing signs of strain. Retailers report that lower- and middle-income shoppers are pulling back or trading down to cheaper alternatives, while higher-income consumers remain more resilient. The divergence points to an economy that is growing unevenly, with the benefits of recent growth concentrated among wealthier households.