US GDP Grows 1.4%, Missing Forecasts on Shutdown, Trade
February 20, 2026
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6:02Now PlayingUS GDP Grows 1.4%, Missing Forecasts on Shutdown, Trade
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as posted by the channelLindsey Piegza, Chief Economist at Stifel, reacts to US GDP and PCE data.
The US economy grew less than expected at the end of last year, dragged down by a record-long government shutdown, consumer spending and trade.
Inflation-adjusted gross domestic product increased an annualized 1.4% in the fourth quarter after rising 4.4% in the prior period, according to the government’s initial estimate out Friday. Overall, the economy expanded 2.2% last year, data from the Bureau of Economic Analysis showed.
The weak quarterly result — which was below all forecasts in a Bloomberg survey of economists — came as the US government was shut down for almost half of the three-month period. The BEA said the reduction in federal services during the shutdown subtracted about 1 percentage point from GDP, though the full impact couldn’t be estimated.
Less than an hour before the data were released, President Donald Trump posted on social media that the shutdown would cost the US “at least two points in GDP.”
Despite the year-end slowdown, the data still cap a solid year for the US economy, which shrank in the first quarter amid a monumental pre-tariff surge in imports, only to bounce back later in the year. The turnaround came after Trump backed off of his most punitive levies and the Federal Reserve lowered interest rates, helping drive the stock market to record highs and enabling wealthier Americans to keep spending.
Trump reclaimed the White House last year with a promise to deliver a “golden age” for the US, including by bringing manufacturing back to the country and lowering the cost of living. Factory activity only just started to pick up after an extended slumber and the inflation rate barely budged in 2025 — putting affordability front and center for this year’s midterm elections.
Even with the drag from the shutdown, a gauge of underlying demand was still strong in the fourth quarter. Consumer spending slowed but remained solid, and investment in artificial intelligence data centers has set record after record in recent quarters.
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