The economic figures for the fourth quarter of 2025 have been released, revealing a less than stellar performance. The Gross Domestic Product (GDP) grew by only 1.4 percent, missing the anticipated target of 2.5 percent. Meanwhile, inflation remains steady at 3 percent.
This data, among other indicators, was made available early Friday morning.
Consumer spending, often seen as a reflection of public confidence in the economy, is a key measure. Typically, individuals hesitate to make significant purchases or dine out if they are concerned about their financial stability.
An economist has suggested that the federal government’s Schumer Shutdown may have contributed to the sluggish economic growth.
Currently, there is a partial government shutdown, though it is unlikely to have the same effects as the Schumer Shutdown.
President Trump has been actively addressing public expectations regarding the economic situation:
Consumer spending is generally regarded as a metric indicative of consumer confidence in the economy; people in general aren’t buying new sofas and going out for dinner if they’re worried about their bank accounts.
At least one economist is pointing at the federal government’s Schumer Shutdown as part of the reason for the slow growth.
“The Federal government shutdown clearly sent the economy careening off its strong growth path in the fourth quarter which is a one-off that won’t be repeated in early 2026,” said Chris Rupkey, chief economist at Fwdbonds.
Of course, there is a partial shutdown at the moment, but it won’t have the impact the Schumer Shutdown did.
President Trump has been managing expectations:
Just before the data release, President Donald Trump warned that the GDP number would be soft, blaming it on the government shutdown that ended in November.
All in all, the report could have been better, but there are a few hints of silver linings:
Though the headline GDP number looked weak, underlying signs of demand were strong.
Another key Fed metric, called final sales to private domestic purchasers, posted a 2.4% increase for the quarter, half a percentage point lower than the prior quarter but still indicative of solid underlying demand in the $31.5 trillion U.S. economy.
Also, gross private domestic investment rose 3.8% after being flat in Q3.
The real question here is this: How will it affect the midterms?
