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- US economy slowed more than expected at end of 2025 (abcnews.com)
U.S. Economy Cools in Late 2025, Consumer Spending Slows
Washington D.C. – The U.S. economy experienced a more significant slowdown than anticipated in the final quarter of 2025, according to federal government data released on Friday. The nation’s Gross Domestic Product (GDP) expanded at an annualized rate of 1.4% during this period, a notable decrease from the robust 4.4% growth observed in the preceding quarter.
This economic deceleration at the close of last year was partly attributed to a reduced pace of consumer spending, as reported by the U.S. Commerce Department. The GDP report adds to recent indicators suggesting growing financial strain on American shoppers, who are responsible for approximately two-thirds of the nation’s economic activity.
Previous retail sales data indicated flat performance in December, potentially reflecting subdued holiday season spending. Concurrently, credit card debt has been on the rise, and consumer sentiment has remained subdued.
The new GDP figures offer a critical assessment of the country’s economic health as policymakers continue to confront persistent high inflation and a sluggish job market. While inflation did ease in January, reaching its lowest point in nine months and defying predictions of a tariff-induced increase in costs, it still hovers above the Federal Reserve’s 2% target rate.
Despite the broader economic slowdown, a recent jobs report revealed stronger-than-expected hiring in January. However, this positive news was tempered by an updated estimate that pointed to near-stagnation in the labor market throughout the previous year.
The surge in GDP during the third quarter of 2025 was largely driven by a boost in consumer spending, the Commerce Department had previously stated.
Over the past year, the economy has grappled with a dramatic slowdown in hiring coupled with elevated inflation, raising concerns about “stagflation” – a challenging scenario that puts the Federal Reserve in a difficult position. The central bank is tasked with the dual mandate of controlling inflation and maximizing employment, primarily utilizing interest rates as its key tool.
Federal Reserve Chair Jerome Powell acknowledged this “challenging situation” for the central bank in December, noting the strain on both aspects of the Fed’s mandate.
At its most recent meeting in January, the Fed opted to hold interest rates steady, concluding a series of three consecutive quarter-point rate cuts. Futures markets currently anticipate two quarter-point interest rate reductions this year, with the first projected for June and the second in the fall, according to the CME FedWatch Tool.
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- US economy slowed more than expected at end of 2025 (abcnews.com)