The U.S. economy hit the brakes in the final quarter of 2025 as the Trump administration's policies continued to take a toll, according to the latest government data. Gross domestic product (GDP) grew at a meager 1.4% annualized rate in the fourth quarter, a sharp deceleration from the robust 4.4% pace seen just three months prior.
What this really means is that the core economic pillars that had been propping up the Trump-era expansion - consumer spending and business investment - are starting to show serious cracks. The government shutdown alone shaved a full percentage point off GDP, while the pullback in consumer spending also weighed heavily.
Affordability Crisis Looms
The bigger picture here is that the Trump economy is increasingly showing signs of a "K-shaped" recovery, where upper-income households continue to thrive while lower-income consumers struggle with staggering wealth inequality and an affordability crisis driven by high inflation.
As AP News reports, job growth slowed to a crawl last year, with only 181,000 positions added - the fewest outside the pandemic since the Great Recession. At the same time, the Supreme Court struck down many of Trump's tariffs, which had been fueling inflation and dampening business investment.
The bottom line is that the economic boom that propelled Trump's presidency is starting to fizzle, and the president's promises of "no more shutdowns" and "lower interest rates" seem increasingly out of touch with reality. As the country heads into an election year, voters will be closely watching to see if the Trump economy can regain its footing or if a recession is looming on the horizon.