Government shutdown slowed quarter 4 gross domestic product growth
Feb. 20 (UPI) — The 43-day government shutdown in the fall stymied U.S. gross domestic product growth in the fourth quarter, the Bureau of Economic Analysis reported Friday.
GDP for the fourth quarter of 2025 grew by 1.4% on an annual basis, more than a full point below the Dow Jones estimate of 2.5%. Consumer spending climbed more slowly than expected, while government spending lagged behind greatly.
The slowdown in growth is significant when compared to the 4.4% growth recorded in the third quarter.
While economic growth slowed, inflation continued to apply pressure. The personal consumption expenditures price index, the key measurement of inflation used by the Federal Reserve, increased by 2.9%, well above the Fed’s 2% target.
The price index for GDP purchases rose 3.7%, accelerating from 3.4% in quarter three.
The BEA report says the full effects of the record government shutdown “cannot be quantified” as the data cannot be separated. It still estimated the effects of reduced labor services by government employees.
Hundreds of thousands of government employees were furloughed during the shutdown.
“BEA estimates that this reduction in services provided by the federal government subtracted about 1.0 percentage point from real GDP growth in the fourth quarter,” the report says.
Government spending in defense and nondefense declined, as did spending on exports.
Health care services were a leading source of growth in consumer spending. Decreased spending on goods offset this growth.
