WASHINGTON (AP) — U.S. financial progress slowed within the closing three months of final 12 months, dragged down by the six-week shutdown of the federal authorities and a pullback in client 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.
Client 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. economic system: It’s rising steadily, however with out creating many roles. Development was a reasonably wholesome 2.2% in 2025, but a authorities report final week confirmed that employers added less than 200,000 jobs final 12 months — the fewest since COVID struck in 2020.
Economists level to a number of potential causes for the hole: The Trump administration’s crackdown on immigration has sharply slowed inhabitants progress, lowering the variety of individuals accessible to take jobs. It’s one motive that the unemployment charge rose solely barely — to 4.3% from 4% — final 12 months, even with the almost 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 provide extra with out discovering new workers. And the price of tariffs has lowered many corporations’ earnings, probably main them to chop again on hiring.
The economic system can be uncommon proper now as a result of progress is strong, inflation has slowed a bit, and unemployment is low, however surveys present that Individuals are usually gloomy in regards to the economic system. In January, a measure of client confidence fell to its lowest level since 2014, but shoppers have stored spending, propelling progress.
A few of that spending could also be disproportionately pushed by upper-income shoppers, in a phenomenon generally known as the “K-shaped” economy. But information from many massive banks suggests lower-income shoppers are nonetheless elevating their spending, even when by not as a lot.
