economy
February 20, 2026
Fourth-quarter U.S. GDP up just 1.4%, badly missing estimate; inflation firms at 3%
The core PCE price index was expected to increase 3% from a year ago in December. GDP was projected to rise at a 2.5% pace in Q4.
TL;DR
- Fourth-quarter U.S. GDP grew at a 1.4% annualized rate, missing estimates of 2.5%.
- A government shutdown from October 1 to November 12 is estimated to have subtracted about 1 percentage point from growth.
- Consumer spending growth slowed in the fourth quarter, and government spending decreased sharply.
- For the full year 2025, the U.S. economy grew at a 2.2% pace, down from 2.8% in 2024.
- The core personal consumption expenditures (PCE) price index, excluding food and energy, rose 3% in December, staying above the Fed's 2% target.
- Despite the slowdown, final sales to private domestic purchasers increased by 2.4%, indicating solid underlying demand.
- Gross private domestic investment rose 3.8% in the fourth quarter.
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