US Fourth Quarter GDP Growth Revised Down to 0.5 Percent
The US economy grew at a revised 0.5 percent rate in the fourth quarter following downgrades to business and consumer spending. Corporate profits rose sharply.
Economic growth in the United States slowed more than previously estimated in the fourth quarter, as business investment and inventory accumulation were revised lower. According to the Bureau of Economic Analysis, gross domestic product (GDP) increased at an annualized rate of 0.5%, down from the previously reported 0.7%. This final reading represents a significant deceleration from the 1.4% advance estimate and the 4.4% growth pace recorded in the third quarter.
The revision was primarily due to lower spending on intellectual property products and reduced inventory growth. Consumer spending, which accounts for the majority of the economy, was also adjusted to a 1.9% rate from the earlier 2.0%. Analysts noted that last year's government shutdown played a key role in the fourth-quarter slowdown.
While GDP growth cooled, corporate profits showed resilience, increasing by $246.9 billion compared to a $175.6 billion rise in the third quarter. Gross domestic income (GDI) grew at a 2.6% rate, and the average of GDP and GDI—a measure often cited as a more accurate reflection of economic activity—rose by 1.5%.
Domestic demand, measured by final sales to private domestic purchasers, grew at an 1.8% pace. Although growth is expected to have improved in the early months of 2026, the geopolitical impact of the United States-Israel war on Iran continues to cast a cloud over the economic landscape.
