Making Money panelists Michelle Girard and Chris Low discuss the February Jobs report, the impact on energy prices of the Middle East crisis and the outlook for the Fed.
This is a developing story on the second reading of fourth quarter gross domestic product growth. Check back later for updates.
The US economy grew more slowly in the fourth quarter than previously thought, after the Commerce Department released its first review the real gross domestic product (GDP) growth for the last quarter.
The Bureau of Economic Analysis (BEA) published its second estimate of fourth-quarter GDP, which showed the economy grew by 0.7%. That was slower than the 1.4% estimate from economists polled by LSEG, and lower than the Commerce Department’s initial fourth-quarter GDP estimate of 1.4%.
Together with the 0.6% contraction in GDP in the first quarter of 2025, and increases of 3.8% in the second quarter and 4.4% in the third quarter, the US economy grew at an annual rate of about 2.08% in 2025. That figure is subject to change as the BEA will release a final revision to the fourth quarter GDP figure released today as more data comes in.
The BEA noted that increases in consumer spending and investment boosted real GDP in the fourth quarter, but these gains were partially offset by declines in exports and government spending. Imports also fell in the quarter.
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US GDP grew slower than previously expected in the fourth quarter, due to a government shutdown. (iStock / iStock)
Downgrades in exports, consumer spending, government spending and investment, as well as imports falling less than previously estimated, contributed to fourth-quarter GDP 0.7 percentage points lower than initially estimated.
Real final sales to private domestic buyers, which are the sum of consumer spending and gross private fixed capital formation, rose 1.9% in the fourth quarter. That figure was adjusted downwards by 0.5 percentage points compared to the previous estimate.
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BEA estimated that the 43-day partial government shutdown last fall contributed to lower GDP, but could not quantify the full effect. (Al Drago/Getty Images/Getty Images)
The publication of the report was partially delayed government shutdown which ran from October to mid-November, which also affected the GDP data because of its impact on federal government spending and on the consumer spending of federal employees whose paychecks were delayed.
BEA is unable to quantify the full impact of the shutdown, although it estimates that the reduction in federal government services reduced real GDP growth by about 1 percentage point in the fourth quarter.
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Federal Reserve Chairman Jerome Powell and central bank policymakers will meet next week. (Amanda Andrade-Rhoades/Reuters / Reuters Photos)
What experts say
“With markets heavily focused on oil prices and geopolitics, today’s data may remain largely under the radar. Despite signs of economic weakening, more sticky inflation data simply reinforces the idea that the Fed will remain on the sidelines,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
US investment analyst Bret Kenwell of eToro noted that the “downward revisions were broad-based; the most meaningful decline came in personal consumption, which accounts for about two-thirds of US GDP.”
“The Fed is now looking at an environment where inflation remains sticky and will soon gain an energy-driven boost, while GDP growth and the labor market continue to lose momentum. That’s not an easy setup for aggressive rate cuts unless the economy shows clearer signs of meaningful deterioration,” Kenwell added.
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