US GDP growth slowed sharply in the fourth quarter, missing expectations and raising fresh concerns about economic momentum. David Goebel, Investment Strategist at Evelyn Partners, shares his reaction to the data and its market implications.
David Goebel, Investment Strategist at Evelyn Partners, the UK wealth manager, commented:
“The advance estimate for US GDP in the fourth quarter of 2025 came in weaker than expected at 1.4% annualised quarter-on-quarter compared to economists’ expectations of 2.8%. This follows an increase of 4.4% in the prior period. Overall, the US economy expanded 2.2% over the calendar year 2025.
This surprisingly weak figure was likely most weighed down by the government shutdown, which lasted nearly half of the three-month period. US President Donald Trump suggested the shutdown cost the US “at least 2 points in GDP” in a social media post prior to the data release, blaming the Democrats for the issue. The Commerce Department said the full effect of the government shutdown, which ran from October 1 to the November 12, ‘cannot be quantified’. However, one measure, the reduction in services provided by federal government workers, dropped about 1 percentage point from inflation-adjusted GDP growth in Q4.
Also released this afternoon was the Fed’s preferred inflation measure, the Personal Consumption Expenditures price index which unexpectedly increased from 2.8% in November to 2.9% in December.
It’s been a rollercoaster year for the US economy, which initially shrank on tariff expectations, only to rebound as Trump backed down on some of the most punitive levies, and the Federal Reserve cut rates. Today’s data will have been impacted by the government shutdown, but nonetheless raises concerns around the health of the US economy. Stocks fell slightly on the news.”
