The U.S. economy ended 2025 with its weakest quarterly performance of the year — but the story is more complicated than the 0.7% headline suggests. A federal government shutdown that ran through most of October knocked roughly a full percentage point off growth, and consumer spending and business investment remained the economy's backbone. For the full year, GDP grew 2.1%, a solid-if-unspectacular result. The bigger concern heading into 2026 may be that inflation has not yet reached the Fed's 2% target, limiting the central bank's room to cut interest rates even as growth cools.