The gross domestic product (GDP) of the United States rose at a 1.4% annual rate in the fourth quarter, the Commerce Department reported Friday, down from 4.4% in the July-September quarter and 3.8% in the quarter before that, AP reported.
A drop in government and consumer expenditure contributed to the slowdown in growth during the fourth quarter, said the government. Consumer spending increased by only 2.2%, a marked deceleration from the healthy 3.5% rise in the third quarter.
The report highlights an unusual feature of the US economy that it is expanding steadily but generating few new jobs. In 2025, growth reached a solid 2.2%, yet last week’s government report revealed that employers created fewer than 200,000 jobs, the lowest figure since the COVID pandemic began in 2020.
Economists point to several possible reasons for the gap: The Trump administration’s crackdown on immigration has sharply slowed population growth, reducing the number of people available to take jobs. It’s one reason that the unemployment rate rose only slightly — to 4.3% from 4% — last year, even with the nearly non-existent hiring.
Some businesses may also be holding back on adding jobs out of uncertainty about whether artificial intelligence will enable them to produce more without finding new employees. And the cost of tariffs has reduced many companies’ profits, possibly leading them to cut back on hiring.
The economy is also unusual right now because growth is solid, inflation has slowed a bit, and unemployment is low, but surveys show that Americans are generally gloomy about the economy. In January, a measure of consumer confidence fell to its lowest level since 2014, yet consumers have kept spending, propelling growth.
Some of that spending may be disproportionately driven by upper-income consumers, in a phenomenon known as the “K-shaped” economy. Yet data from many large banks suggests lower-income consumers are still raising their spending, even if by not as much.