Key Points:
- The U.S. economy grew at just a 1.4% rate in the fourth quarter.
- A record 43-day government shutdown severely dragged down the national output.
- Job growth stalled last year, adding the fewest workers since the 2009 recession.
- Wealthy households continue to spend while lower-income families struggle with high prices.
U.S. economic growth hit a major speed bump at the end of last year. The Commerce Department reported Friday that the gross domestic product (GDP) grew at just a 1.4% annualized rate in the fourth quarter. This figure fell far short of the 3.0% pace that economists originally expected.
A massive, record-breaking government shutdown took the primary blame for the slowdown. The 43-day closure stopped federal services, delayed paychecks, and reduced food assistance. The Congressional Budget Office estimates this shutdown erased roughly 1.5 percentage points from the final GDP numbers.
President Donald Trump voiced his frustration online right before the report dropped. He argued the shutdown stole at least two points of growth from the country and demanded lower interest rates from the Federal Reserve to fix the issue.
Beyond Washington’s political fights, the economy shows deep signs of inequality. Experts describe the current situation as a “K-shaped” recovery. Wealthy families keep spending money and driving the economy forward. At the same time, lower-income Americans face a severe affordability crisis caused by high inflation and new import tariffs.
The job market also looks incredibly weak. Employers added only 181,000 jobs across the entire year. Excluding the pandemic crash, that represents the worst year for job seekers since the Great Recession of 2009. Many families are draining their savings just to keep up with daily expenses.
Despite these grim numbers, some bright spots remain for the coming year. Economists expect upcoming tax refunds to put much-needed cash back into shoppers’ pockets.
Technology also continues to carry the weight of the broader economy. Massive investments in artificial intelligence, computer chips, and data centers accounted for a full third of all economic growth during the first nine months of last year. Experts believe this ongoing tech boom will help shield the country from the negative impacts of tariffs and a shrinking workforce.
