US economy grew a sluggish 0.5% in fourth quarter, government says, downgrading previous estimate
Gas prices are displayed at a gasoline station, Tuesday, April 7, 2026, in Los Angeles. (AP Photo/Damian Dovarganes)
By PAUL WISEMAN
Updated 7:29 AM GMT-7, April 9, 2026
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WASHINGTON (AP) — The American economy, slowed by last fall’s 43-day government shutdown, grew at a sluggish 0.5% annual pace from October through December, the Commerce Department reported Thursday in downgrade of its previous estimate.
U.S. gross domestic product — the nation’s output of goods and services — decelerated in the fourth quarter after registering impressive growth of 4.4% from July through September and 3.8% from April through June. The latest number was marked down from the Commerce Department’s previous estimate of 0.7% fourth-quarter growth.
Federal government spending and investment fell at a 16.6% annual pace because of the shutdown, lopping 1.16 percentage points off fourth-quarter GDP growth. Consumer spending expanded 1.9%, down a notch from the previous estimate and from 3.5% in the second quarter. Spending on goods — such as cars and clothing — grew just 0.3%, down from 3% in the July-September period.
For all of 2025, the economy grew 2.1% last year, slower than 2.8% in 2024 and 2.9% in 2023.
Business investment, excluding housing, increased at a 2.4% pace, likely reflecting money being poured into artificial intelligence, but the increase was down from 3.2% in the third quarter.