Shutdown Cuts Q4 GDP; Analysts Expect Rebound
Q4 GDP rose 1.4% annualized after a 43-day shutdown that cut roughly one percentage point from growth, while PCE inflation was 2.9% in December.
Overview
The Commerce Department said Friday that gross domestic product grew at a 1.4% annual rate in the fourth quarter.
The GDP report said the 43-day government shutdown reduced fourth-quarter growth by about one percentage point and sharply cut federal government services.
President Donald Trump blamed Democrats for the slowdown, saying the "Democrat Shutdown" cost at least two points in GDP, while White House spokesperson Kush Desai said the private sector remained robust.
Consumer spending rose 2.4% in the fourth quarter, down from 2.9% in the third, and headline PCE inflation grew at a 2.9% annual rate in December.
The Commerce Department will issue two more fourth-quarter readings, and analysts including Capital Economics and Oxford Economics expect a sharp rebound with Capital Economics projecting roughly 3% annualized growth in the first quarter of 2026.
Analysis
Center-leaning sources frame the slowdown as largely temporary and explainable — stressing the 43-day government shutdown, delayed data quirks, and pockets of strength (jobs, AI investment) while foregrounding upbeat economist forecasts. They use reassuring language and selective emphasis, giving limited space to deeper distributional or long-term structural critiques.
Sources (19)
FAQ
The government shutdown lasted 43 days, stretching from October 1, 2025, to November 12, 2025.
The 43-day shutdown reduced fourth-quarter GDP growth by about one percentage point.
Consumer spending rose 2.4% in the fourth quarter, contributing to the 1.4% annualized GDP growth, though down from 2.9% in the third quarter.
Analysts including Capital Economics project roughly 3% annualized growth in the first quarter of 2026, expecting a sharp rebound as shutdown effects reverse.
Headline PCE inflation grew at a 2.9% annual rate in December.
History
16 sources