Trump's Economy Decelerated As Shutdown, Consumer Spending Drag On Growth

President Donald Trump was having a hard time selling Americans on his vision for the economy when it was expanding at a rapid clip. Now, growth is starting to decelerate.

The Commerce Department on Friday estimated that the economy grew at an annual rate of just 1.4 percent during the fourth quarter as spending cooled amid a record-breaking government shutdown. The 43-day shutdown erased a full percentage point from gross domestic product — much of which is likely to be recouped over time — but Commerce’s preliminary estimate also found that American households pulled back spending on consumer goods in the final months of the year.

Before the release, Trump blamed the soft GDP report on Democrats and Federal Reserve Chair Jerome Powell, whom he’s repeatedly targeted for refusing to bring down interest rates.

“The Democrat Shutdown cost the U.S.A. at least two points in GDP,” he posted on Truth Social, his social media platform. “That’s why they are doing it, in mini form, again. No Shutdowns! Also, LOWER INTEREST RATES. “Two Late” Powell is the WORST!!!”

In a separate release, Commerce reported that prices grew at an annual rate of 3 percent in December, excluding food and energy costs. That’s a full percentage point above the Federal Reserve’s inflation target.

Friday’s double whammy of economic releases ends a string of positive employment and inflation reports that Trump and top White House officials had cited as proof of his agenda’s success. The economy’s rate of expansion through the middle of last year stunned many economic observers — and fueled a boom in the stock market that generated trillions of dollars of wealth.

But the GDP estimate suggests that momentum is starting to slow.

“We expect a similar pattern of economic growth in 2026, as households with sufficient income and wealth continue to drive most of the consumer spending, while pressure continues to build for other households under strain from higher costs, longer unemployment spells, and high consumer credit balances,” Joel Kan, a vice president and deputy chief economist at the Mortgage Bankers Association, wrote in a note.

That’s going to create challenges for Trump as he attempts to reverse a wave of negative polling with regard to his handling of the economy. The president’s approval and favorability ratings with voters hit record lows in a recent survey conducted by Morning Consult. Earlier this month, a poll from Reuters/Ipsos reported that the president was underwater by 23 percentage points when it came to how Americans view his handling of the economy.

On Thursday — in what was framed as a preview of his State of the Union address next week — Trump told a Georgia audience that he has “solved” what some pundits have identified as an affordability crisis.

“They would say affordability, everybody would say, ‘Oh, Trump caused–,’ no, they cause– they cause the affordability problem,” Trump said. “And we’ve solved it. And we’re going still lower, but we’ve solved it.”

White House officials like acting Council of Economic Advisers Chair Pierre Yared say the pessimism expressed by consumers is influenced by memories of the inflation surge that dragged down Joe Biden’s presidency, and that the so-called hard data — measurements of unemployment, growth, consumer spending, etc. — provide a clearer indication of the economy’s overall health.

Key measurements do show that Trump’s economy has remained resilient despite the president’s fast-changing trade policies and a series of geopolitical shocks. Real final sales to private domestic purchasers — which combines business investment and consumer spending — grew at a rate of 2.4 percent during the final three months of last year. That’s a half-point slower than what was recorded during the third quarter, but consistent with levels seen through the post-pandemic recovery.

“Today’s GDP report showed that President Trump continues to deliver robust private sector-led economic growth with strong consumption and investment. Even with the Democrat Government Shutdown dragging the country down last fall, GDP growth for 2025 smashed the Federal Reserve, Congressional Budget Office, and International Monetary Fund’s ‘expert’ predictions," White House spokesperson Kush Desai said in a statement.

"As President Trump’s proven agenda of tax cuts, deregulation, tariffs, and energy abundance continues taking effect and as trillions in investments continue pouring in, America’s economic comeback is set to only accelerate in 2026.”