\n<\/p>\n
Economic growth slowed more than expected near the end of 2025 while inflation held firm, according to data released Friday that could complicate the Federal Reserve’s path on interest rates.<\/p>\n
Gross domestic produce rose at an annualized rate of just 1.4%, according to Commerce Department numbers released Friday, well below the Dow Jones estimate for a 2.5% gain.<\/p>\n
For the full year in 2025, the U.S. economy grew at a 2.2% pace, down from the 2.8% increase in 2024. <\/p>\n
At the same time, inflation held firm in December, according to the gauge most closely watched by Fed officials.<\/p>\n
The core personal consumption expenditures price index, which excludes food and energy, rose 3% in December, according to a separate release. That matched the consensus forecast but kept the pivotal inflation measure well above the Fed’s 2% target.<\/p>\n
On a headline basis, the PCE index accelerated 2.9%, or 0.1 percentage point higher than expected. <\/p>\n
Both indexes rose 0.4% for the month, compared to the respective forecasts for 0.3%.<\/p>\n
Just prior to the data release, President Donald Trump warned that the GDP number would be soft, blaming it on the government shutdown that ended in November.<\/p>\n
“The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns!” Trump said in a Truth Social post<\/a>. “Also, LOWER INTEREST RATES. “Two Late” Powell is the WORST!!!”<\/p>\n The latter part of the post was a reference to Fed Chair Jerome Powell, whom Trump has repeatedly criticized for not lowering rates more aggressively.<\/p>\n The Fed cut its benchmark rate by three-quarters of a percentage point in late 2025 but has since signaled a more cautious approach as officials assess progress on inflation alongside risks to the labor market.<\/p>\n While Trump blamed the shutdown, the Commerce Department said the deceleration in GDP, which grew at a 4.4% rate in the third quarter, was the result in a pullback in consumer spending and exports. <\/p>\n Personal consumption expenditures, a proxy for consumer outlays, rose 2.4% in the quarter, down from the 3.5% gain in the prior period. Exports fell 0.9% after surging 9.6% in Q3.<\/p>\n