U.S. economic growth in the fourth quarter was much weaker than first reported, with revised data Friday showing gross domestic product rose at a 0.7 percent annual rate instead of the previously estimated 1.4 percent.
The downward revision reflected weaker exports, softer consumer spending, lower government spending, and less investment than initially estimated, according to the Commerce Department. Trade also looked less supportive than in the first estimate: exports were revised lower, while imports fell by less than previously reported, reducing the boost to growth from trade.
Consumer spending was revised lower largely because of weaker services spending, especially on health care. Investment was revised down because of weaker spending on structures and software, while government spending was marked lower mainly because of weaker state and local construction.
A measure of underlying demand held up better than the headline figure suggested. Real final sales to private domestic purchasers rose at a 1.9 percent annual rate, though that was down from the previously reported 2.4 percent.
The report also said the October-November government shutdown subtracted about 1.0 percentage point from fourth-quarter growth by reducing federal labor services, though that was already incorporated into the earlier estimate and did not drive the revision. The report notes that it is hard to measure how the government shutdown might have weighed on the growth through secondary effects.
Inflation readings in the report were unchanged, with the personal consumption expenditures price index rising at a 2.9 percent annual rate and core PCE inflation, which excludes food and energy, running at 2.7 percent. For all of 2025, the economy grew 2.1 percent, down slightly from the previously reported 2.2 percent.
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