GDP growth falls below expectations

Real gross domestic product (GDP) increased at an annual rate of 1.4% in the fourth quarter of 2025 (October, November, and December), according to the advance estimate released Friday by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 4.4%.

"Real GDP growth fell below expectations in the fourth quarter, but much of the shortfall resulted from the government shutdown. The Bureau of Economic Analysis estimated that the shutdown shaved off a full percentage point of growth during the quarter, but that should be substantially repaid in the first quarter of 2026, which is poised for a strong reading,” said America's Credit Unions Chief Economist Curt Long. “On the flip side, because furloughed employees received back pay in the fourth quarter, the prices paid for government services soared, which placed yet more upward pressure on PCE inflation. Overall, growth conditions are solid and inflation is still above the FOMC’s target, so there is not an obvious need for a rate cut. Credit unions continue to play a critical role in addressing persistent inflation by offering the most affordable financial services in the market."