Federal Data Shows US Economy Slowed More Than Expected in Final Quarter

The U.S. economy experienced a sharper slowdown in the fourth quarter than previously reported, with growth dropping to just 0.7% according to revised federal data. The Commerce Department's updated figures show significant reductions in both consumer spending and business investment compared to initial estimates.

WASHINGTON – The American economy experienced a more pronounced deceleration during the final three months of last year than federal officials initially calculated, according to updated data released Friday by the Commerce Department.

The Bureau of Economic Analysis announced that the nation’s gross domestic product expanded at just a 0.7% annualized rate during the fourth quarter, a substantial reduction from the 1.4% growth rate that was first reported. Financial experts surveyed by Reuters had anticipated the growth figure would remain unchanged at the original 1.4% estimate.

This represents a significant decline from the robust 4.4% expansion recorded during the third quarter of the year.

The downward adjustment stems from reduced estimates in several key economic sectors, including consumer expenditures and corporate capital investments. Additional factors contributing to the revision include lower government expenditures, particularly at the state and municipal level for infrastructure projects, along with decreased export activity. The unprecedented 43-day federal government closure that occurred last year also contributed to the dampened economic performance.

A critical indicator monitored by economic policymakers – final sales to private domestic purchases, which strips out government activity, international trade, and inventory changes – registered growth of 1.9%. This domestic demand measurement had originally been calculated at 2.4%, compared to the 2.9% rate achieved in the July through September period.

While analysts anticipate improved economic performance in the current quarter, the ongoing U.S.-Israeli conflict with Iran has elevated oil costs and created uncertainty about future economic conditions.