Lackluster GDP for 2025Q4 and the Year

By SBE Council at 20 February, 2026, 5:42 pm

by Raymond J. Keating -

The U.S. economy grew at a sluggish pace in 2025, according to the latest gross domestic product (GDP) report from the U.S. Bureau of Economic Analysis.

That was the case for the fourth quarter estimate of real GDP growth - a mere 1.4 percent (annual rate) - and for the estimate of annual real GDP growth for all of 2025 - a sluggish 2.2 percent, which marked the slowest rate versus the three previous post-pandemic years.

As for the fourth quarter, the positives could be found in:

● Personal consumption expenditures on services (+3.4 percent)

● Intellectual property products investment (+7.4 percent).

Meanwhile, worrisome or outright negatives for the fourth quarter real GDP estimate included:

● A decline in personal consumption expenditures on goods (-0.1 percent)

● The eighth straight quarterly decline in business investment in structures (-2.4 percent)

● A slowdown in business equipment investment (from +5.2 percent in the third quarter to +3.2 percent in the fourth)

● A decline in residential (housing) investment for the fourth straight quarter (-1.5 percent)

● A decline in real exports (-0.9 percent)

● A decline in imports for the third straight quarter (-1.3 percent)

Annual GDP Highlights

Regarding the annual real data for 2025, positives included:

● Respectable growth in personal consumption expenditures (+2.7 percent)

● Growth in business investment overall (+4.2 percent)

● Strong growth in business equipment investment (+8.2 percent)

● Growth in intellectual property products investment (+5.8 percent).

On the negative side:

● Business structure investment declined (-5.0 percent)

● Residential investment declined (-2.2 percent)

● Export growth slowed (from +3.6 percent in 2024 to +1.7 percent in 2025)

● Import growth also slowed (from +5.8 percent in 2024 to +2.7 percent in 2025).

The U.S. economy finished a poor year of economic growth on a weak note.

What would provide the greatest help to our economy as we move deeper into 2026 and beyond? While politics too often shifts with the winds, economic realities and principles remain steadfast. As I've noted many times before, a pro-growth agenda is clear: low taxes, light regulation, free trade, strong private property (including intellectual) rights and protections, the rule of law, limited government, a welcoming immigration system, and sound money.

To the degree that this agenda is adopted, U.S. entrepreneurs, businesses, investors, and workers will benefit accordingly.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .