US GDP growth cools to 1.4pc, PCE overshoots forecasts

(Sharecast News) - US economic growth slowed sharply at the end of 2025 while inflation remained stubborn - a combination that will likely complicate the Federal Reserve's path on interest rates. According to the Bureau of Economic Analysis, fourth‑quarter gross domestic product rose at an annualised rate of just 1.4%, well below the 2.5% expected by economists, marking a clear loss of momentum from the 2.8% expansion recorded across 2024 and the stronger‑than‑forecast performance seen earlier in 2025. Full‑year growth eased to 2.2%.

At the same time, inflation stayed firm, with core personal consumption expenditures, the Federal Reserve's preferred inflation gauge, excluding food and energy, rising 3% year‑on‑year in December, matching expectations but remaining well above the central bank's 2% target. Headline PCE accelerated to 2.9%, slightly hotter than forecast.

Both measures increased 0.4% on the month, compared with consensus estimates of 0.3%.

The data landed shortly after Donald Trump warned that GDP would come in soft, blaming the weakness on the government shutdown that ended in November.

"The Democrat Shutdown cost the USA at least two points in GDP. That's why they are doing it, in mini form, again. No Shutdowns!" Trump said on social media. "Also, LOWER INTEREST RATES. "Two Late" Powell is the WORST!!!"



Reporting by Iain Gilbert at Sharecast.com