U.S. economic growth in the last three months of 2025 was much more modest than expected, according to the Commerce Department’s second estimate released March 13.

The report sharply lowered estimated fourth quarter growth to just 0.7% — half of the 1.4% stated in the initial report and a fraction of the 4.4% seen in 3Q.

Dow Jones’ consensus forecast was for 1.5% 4Q growth.

For the full year, growth as likewise downwardly revised by 10 basis points to 2.1%.

Overall, the Bureau said the revision reflected adjustments to exports, consumer spending, government spending and investment, while imports decreased less than previously expected.

Consumer spending was revised down 40 basis points to 2.0% growth — far below the 3.5% seen in 3Q — with spending on goods falling to 0.4% growth from 3.0% in 3Q, while spending on services fell from 3.6% to 2.7%.

The U.S. government shutdown that spanned Oct. 1-Nov. 12 — the longest in U.S. history — was a key driver of the sequential deceleration in 4Q, resulting in a government spending and investment decline of 5.8% after 2.2% growth in 3Q.

4Q real final sales to private domestic purchases — the sum of consumer spending and gross private fixed investment — increased 1.9% in 4Q after being revised down 50 bps. It increased 2.9% in 3Q.

On the pricing front, the price index for gross domes

On the pricing front, the price index for gross domestic purchases increased 3.8% during 4Q, revised up 10 bps and accelerated from 3Q’s 2.8% increase. Excluding volatile food and energy, the core PCE index decreased by 2.7% (no revision) after a 2.9% 3Q increase.