WASHINGTON — U.S. economic growth hit the brakes in the final quarter of 2025. Real gross domestic product expanded at a 1.4% annualized pace from October through December, the Bureau of Economic Analysis reported Thursday. That marked a slowdown from the 3.1% surge in the third quarter.

Consumer spending and investment propped up the expansion. Households boosted outlays on services. Businesses ramped up research and development, snapped up equipment and built inventories. Those gains kept the economy afloat despite headwinds.

Government spending plunged. Exports dropped. Imports fell too, which added to GDP since it subtracts them in the calculations. The federal shutdown from October to November hammered activity. BEA economists peg that episode as trimming about 1 percentage point from quarterly growth.

Private demand held firmer. Real final sales to private domestic purchasers climbed 2.4% in the quarter. That trailed the 2.9% increase from July through September but signaled steady underlying strength.

Inflation ticked higher. The price index for gross domestic purchases rose 3.7% annualized, up from 2.4% in the prior quarter. The personal consumption expenditures price index increased 2.9%. Core PCE, stripping out food and energy, edged up to 2.7% from 2.6%.

Over the full year, real GDP rose 2.2% in 2025, cooling from 2.8% in 2024. Consumer spending and investment drove most of that advance. Annual PCE inflation stayed level at 2.6%.

The shutdown’s impact rippled through federal operations. Agencies curtailed nonessential functions. That curbed payrolls and contracts. Exports weakened amid softer global demand. Consumer spending growth eased even as holiday sales held up in spots.

Investment bucked the trend. Equipment spending accelerated. Structures investment grew modestly. Residential construction lagged. Inventory piles swelled, another plus for the top-line figure.

Economists watched core measures closely. The 2.4% private demand gain suggests the slowdown may prove temporary. Federal spending could rebound in early 2026. Exports face hurdles from trade tensions and overseas slumps.

BEA revises these numbers as more data flows in. First-quarter 2026 estimates already circulate among analysts. Consumer resilience and business investment will shape the outlook. Inflation’s uptick draws Federal Reserve scrutiny as policymakers weigh rate paths.

The report lands amid political shifts. Incoming administration priorities could jolt spending patterns. Tax debates and budget fights loom large. For now, the economy chugs along, just not as briskly as before.