U.S. GDP Slows to 0.7% in Q4 as Consumer Spending Softens — Evening Brief – 03.13.26

U.S. economic growth slowed sharply at the close of 2025, with gross domestic product expanding at an annualized rate of 0.7% in the fourth quarter, the Bureau of Economic Analysis reported Thursday. The figure marks a downward revision from the 1.4% advance estimate and a sharp pullback from 4.4% growth in the prior quarter. 

The weaker performance reflected broad-based softness across key sectors, including exports, consumer spending, government expenditures, and business investment. The second estimate—delayed from its initial February 26 release due to the October–November government shutdown—underscored a loss of momentum heading into 2026. 

Even so, household spending and private investment continued to make positive contributions to growth. Personal consumption expenditures rose at a 2.0% annual rate, revised from 2.4% previously and well below the 3.5% pace recorded in Q3. Real final sales to private domestic purchasers, a closely watched measure of underlying demand that combines consumer outlays and private fixed investment, increased 1.9%, down from 2.4% in the advance estimate. 

Inflation indicators held steady. The GDP price index increased 3.8%, edging higher from the prior estimate, while the PCE price index remained at 2.9%. Core PCE, which excludes food and energy and is closely tracked by the Federal Reserve, grew 2.7%, unchanged from the earlier reading. 

For the full year, GDP rose 2.1% in 2025, slightly below the 2.2% preliminary figure. The PCE price index advanced 2.6%, while core PCE climbed 2.8%, both consistent with prior estimates.