U.S. Economy Expands 0.5 Percent in Q4 of 2025

(MENAFN) The U.S. economy expanded more modestly than earlier projections in the final quarter of 2025, as a downturn in investment diluted otherwise resilient consumer spending, fresh data from the Bureau of Economic Analysis (BEA) revealed Thursday.

According to the agency’s third estimate, real gross domestic product (GDP) increased at an annualized pace of 0.5% in the October–December period. This marks a sharp slowdown from the 4.4% growth recorded in the prior quarter and comes in 0.2 percentage points below the previous estimate.

The BEA attributed the downgrade primarily to softer investment figures, signaling a pullback in business-related activity.

Household spending and investment both supported economic output during the quarter. However, declines in government expenditures and exports partially counterbalanced those gains. Imports—which are subtracted when calculating GDP—also decreased over the same period.

Sector-level data showed mixed performance. Real value added in private service industries climbed 2.3%, providing a key boost to overall output. In contrast, government sector activity plunged 7.8%, while private goods-producing industries contracted by 1.8%.

Growth was driven largely by gains in wholesale trade, the information sector, and health care and social assistance, the report indicated.

Meanwhile, real final sales to private domestic purchasers—a closely watched gauge combining consumer spending with private fixed investment—rose 1.8% in the fourth quarter, slightly below earlier estimates.

Income-side measures painted a somewhat steadier picture. Real gross domestic income (GDI) increased by 2.6%, easing from 3.5% growth in the previous quarter. The blended measure averaging GDP and GDI rose 1.5%, down from 4% in the third quarter.

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