US economic growth weaker than thought in fourth quarter with government shutdown, consumer pullback

"The nation's gross domestic product the total output of goods and services increased at a 1.4% annual rate in the fourth quarter, the Commerce Department reported Friday, down from 4.4% in the July-September quarter and 3.8% in the quarter before that. The figures point to a more modest pace of growth in the coming quarters, as consumers take on more debt and cut back on saving to maintain their spending."

"The sharp slowdown in government outlays because of the shutdown shaved a full percentage point from growth. Consumers and companies spent at a reasonably solid pace, said Martha Gimbel, executive director of the Budget Lab at Yale and former economist in the Biden White House. This is not a disastrous report. Consumer spending rose 2.4%, a solid increase but notably below the third quarter's healthy 3.5% gain. Federal government outlays plunged nearly 17% amid the shutdown."

U.S. economic growth slowed to a 1.4% annual rate in the fourth quarter, down from 4.4% and 3.8% in prior quarters. The six-week federal government shutdown sharply reduced outlays, shaving about one percentage point from growth. Consumer spending increased 2.4%, a solid rise but below the third quarter's 3.5% gain, as households take on more debt and reduce savings. Business investment expanded only moderately, concentrated in data centers and AI-related equipment. Trade had little impact on fourth-quarter growth after earlier quarters saw import shifts tied to tariff responses.

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