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U.S. GDP Growth Rates Show Divergence and Revisions in Late 2025

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U.S. Economy: Varied Growth in Late 2025 Amidst Revisions and Shutdowns

The United States economy experienced varied growth patterns in the latter half of 2025, with real gross domestic product (GDP) expanding at an annual rate of 4.4 percent in the third quarter before a significant slowdown to 0.7 percent in the fourth quarter. Both quarterly figures were subject to revisions from their initial estimates. Government shutdowns during October and November 2025 influenced the timing of data releases and were estimated to have impacted economic activity.

Third Quarter 2025: Robust Growth with Upward Revisions

For the third quarter of 2025, spanning July, August, and September, real GDP grew at an annual rate of 4.4 percent, an upward revision of 0.1 percentage point from the initial estimate. This followed a 3.8 percent increase observed in the second quarter of 2025.

Key factors contributing to the expansion of real GDP in the third quarter included:

  • Increases in consumer spending
  • Exports
  • Government spending
  • Investment

Imports, which are a subtraction in GDP calculations, decreased during this period. The acceleration in real GDP compared to the second quarter was attributed to upturns in investment, exports, and government spending, alongside an acceleration in consumer spending.

The upward revision for third-quarter real GDP primarily reflected stronger exports and investment, which were partially offset by a downward adjustment to consumer spending. Imports were also revised up. From an industry perspective, private services-producing industries recorded a 5.3 percent increase in real value added, and private goods-producing industries increased by 3.6 percent. The government sector experienced a 0.3 percent decrease in real value added.

Additional economic indicators for the third quarter included:

  • The price index for gross domestic purchases rose 3.4 percent.
  • The personal consumption expenditures (PCE) price index increased 2.8 percent.
  • The PCE price index, excluding food and energy, increased 2.9 percent.
  • Real gross domestic income (GDI) increased 2.4 percent.
  • Corporate profits from current production increased by $175.6 billion, an upward revision of $9.5 billion.

Real GDP grew by 4.4 percent in the third quarter, an upward revision reflecting stronger exports and investment, despite a partial offset from a downward adjustment to consumer spending.

Fourth Quarter 2025: Significant Slowdown and Downward Revisions

In the fourth quarter of 2025, covering October, November, and December, real GDP increased at an annual rate of 0.7 percent, according to the second estimate from the U.S. Bureau of Economic Analysis (BEA). This marked a substantial downward revision of 0.7 percentage points from the advance estimate of 1.4 percent.

The primary contributors to the fourth-quarter real GDP increase were:

  • Consumer spending
  • Investment

These gains were partially counteracted by decreases in government spending and exports. Imports also decreased during this period. The deceleration in real GDP compared to the third quarter was a result of downturns in government spending and exports, in addition to a slowdown in consumer spending. These factors were partly mitigated by an acceleration in investment.

The downward revision to fourth-quarter GDP was influenced by lower estimates for exports, consumer spending, government spending, and investment. Real final sales to private domestic purchasers, which combines consumer spending and private fixed investment, increased 1.9 percent, a revision down from the previous estimate.

Price indexes for the fourth quarter showed:

  • The price index for gross domestic purchases increased by 3.8 percent, a slight upward revision.
  • The personal consumption expenditures (PCE) price index increased 2.9 percent.
  • The core PCE index (excluding food and energy) increased 2.7 percent.

The fourth quarter saw real GDP growth slow sharply to 0.7 percent, a figure marked by substantial downward revisions primarily due to lower estimates for exports, consumer spending, government spending, and investment.

Impact of Government Shutdowns on Economic Activity and Data

Government shutdowns that occurred in October and November 2025 affected the release schedule of several economic data reports, including the second estimate for fourth-quarter GDP. The shutdowns also impacted data collection, specifically for the U.S. Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) for October 2025. To address missing CPI data, the BEA imputed values using geometric means of the September and November CPIs.

The BEA estimated that the reduction in labor services provided by federal employees due to the shutdown subtracted approximately 1.0 percentage point from real GDP growth in the fourth quarter.

Government shutdowns in October and November 2025 were estimated to have subtracted approximately 1.0 percentage point from real GDP growth in the fourth quarter.

Full Year 2025: Modest Overall Growth

For the entirety of 2025, real GDP increased by 2.1 percent. This full-year figure represents a 0.1 percentage point downward revision from the previous estimate.