The US economy expanded at just half the expected pace during the final quarter of 2025, data released on Friday showed.

The 1.4% annual rate marked a sharp deceleration from the prior period’s 4.4% barnburner and counted as the slowest pace since Q1 of 2024 if you exclude last year’s first quarter, which was distorted by the impact of trade policy.

Economists expected a headline GDP print in the neighborhood of 3% from the BEA in Friday’s update. So, this counts as a meaningful disappointment.

The personal spending component rose at a 2.4% pace, below estimates and the second-slowest in seven quarters. Still, spending accounted for 1.58ppt of the overall headline growth outcome.

The biggest detractor from the headline was government spending, which fell at a 5.1% pace, the fastest since 2020. Federal government spending dropped 16.6%, the most in over half a century. Strip out defense and the drop was 24%.

The figure below shows you the breakdown. The government consumption expenditures and gross investment line subtracted 0.91ppt from headline growth. Every other major category was additive.

If you zoom in on federal government outlays and investment, the drag’s 1.15ppt.

Plainly, this is picking up the impact from the longest shutdown on record, which unfolded from early October through mid-November.

Two more quick notables. The key “real final sales to private domestic purchasers” line showed a 2.4% gain for Q4, down from 2.9% the prior quarter and the lowest since Q1 2025, but respectable all the same. The quarterly core PCE readout was a little warm at 2.7% versus 2.6% expected.

The bottom line from Friday’s GDP release is that US government shutdowns do have an impact, and not just on America’s deteriorating institutional credibility.

As the BEA noted, in an effort to summarize the above-cited figures for anyone not inclined to squint at a spreadsheet, “the reduction in services provided by the federal government subtracted about 1ppt from real GDP growth in the fourth quarter.”