WASHINGTON (AP) — U.S. financial development slowed within the last three months of final yr, dragged down by the six-week shutdown of the federal authorities and a pullback in shopper spending.
The nation’s gross home product — the output of products and providers — elevated at a 1.4% annual charge within the fourth quarter, the Commerce Division reported Friday, down from 4.4% within the July-September quarter and three.8% within the quarter earlier than that.
Shopper spending rose simply 2.4%, a major slowdown from the third quarter’s wholesome 3.5% achieve.
The report additionally underscores an odd side of the U.S. financial system: It’s rising steadily, however with out creating many roles. Progress was a reasonably wholesome 2.2% in 2025, but a authorities report final week confirmed that employers added less than 200,000 jobs final yr — the fewest since COVID struck in 2020.
Economists level to a number of attainable causes for the hole: The Trump administration’s crackdown on immigration has sharply slowed inhabitants development, lowering the variety of individuals obtainable to take jobs. It’s one motive that the unemployment charge rose solely barely — to 4.3% from 4% — final yr, even with the practically non-existent hiring.
Some companies may be holding again on including jobs out of uncertainty about whether or not synthetic intelligence will allow them to supply extra with out discovering new workers. And the price of tariffs has lowered many corporations’ income, probably main them to chop again on hiring.
The financial system can also be uncommon proper now as a result of development is strong, inflation has slowed a bit, and unemployment is low, however surveys present that Individuals are usually gloomy concerning the financial system. In January, a measure of shopper confidence fell to its lowest level since 2014, but customers have stored spending, propelling development.
A few of that spending could also be disproportionately pushed by upper-income customers, in a phenomenon generally known as the “K-shaped” economy. But information from many giant banks suggests lower-income customers are nonetheless elevating their spending, even when by not as a lot.
