Summary of US GDP Growth Rate Collapse

Date: February 20, 2026

Key Economic Indicators

• US Q4 GDP Growth Rate: 1.4% (expected: 3.0%)
• Full-Year GDP Growth: 2.2%
• Core PCE Price Index YoY: 3.0% (forecast: 2.9%)
• US PCE Price Index MoM: 0.4% (forecast: 0.3%)
• GDP Price Index: 3.6% (est: 2.8%)
• Personal Consumption: 2.4% (est: 2.4%)

Overview of Economic Performance

The US economy experienced a significant slowdown in the fourth quarter of 2025, with GDP growth plummeting to an annualized rate of just 1.4%. This figure was well below the anticipated 3.0% and marked a stark decline from the previous quarter's growth of 4.4%. Contributing factors to this downturn included a record-long government shutdown, reduced consumer spending, and a widening trade deficit.

Impact of Government Shutdown

The Bureau of Economic Analysis (BEA) estimated that the government shutdown negatively impacted GDP by approximately 1 percentage point. Former President Donald Trump claimed that the shutdown could have cost the economy as much as 2 percentage points. The political climate surrounding the shutdown, which was tied to Democratic demands for stricter immigration controls, added to the economic uncertainty.

Inflation Trends

Despite the slowdown in growth, inflation pressures remained evident, with the Core PCE Price Index rising by 0.4% month-over-month and 3.0% year-over-year in December. This inflation data is particularly significant as it comes ahead of the midterm elections, indicating potential challenges for policymakers.

Political Reactions

In light of the disappointing economic data, Trump criticized the Federal Reserve and called for lower interest rates, blaming Democrats for the economic challenges. The political tensions are exacerbated by the sluggish GDP growth, which highlights broader economic fragility.

Conclusion

The economic landscape as of February 2026 reflects a complex interplay of growth challenges and inflationary pressures, with significant implications for both the political environment and future economic policy decisions.