The economy grew 2.2% in 2025, a year of growth that came despite a number of developments that were expected to be major headwinds, including interest rate hikes by the Federal Reserve and President Donald Trump’s imposition of tariffs.
The growth figures, which are adjusted for inflation, were published Friday by the Bureau of Economic Analysis in its preliminary report for gross domestic product for the fourth quarter.
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The growth rate for 2025 was respectable and better than forecast at the outset of the year. But Trump officials had been touting the prospects for a much stronger number, before the publication of a surprisingly weak fourth-quarter GDP report that saw the economy expanding at only a 1.4% clip, down significantly from the previous two quarters.
The year saw the slowest growth of any of Trump’s years in office, setting aside the pandemic year of 2020. It also represents a slowdown from the previous two years.
The latest GDP data for the fourth quarter will be revised twice more in the coming months as government economists continue to sift through the numbers and come to a final figure.
GDP growth has outperformed expectations over the course of Trump’s second term in office. For instance, in March, the Federal Reserve predicted that overall GDP growth for 2025 would end up being just 1.7%.
Nevertheless, consumer sentiment has been extremely low by historical standards, likely because of the sharp price hikes in recent years. Democrats are hoping to use voter discontent and Trump’s low economic approval ratings against Republicans.
Republicans and the White House have been working to highlight initiatives on affordability and on their One Big Beautiful Bill Act, which was enacted last year and prevented most Americans from seeing a tax hike and added new tax cuts for many workers.
Another positive point for the White House has been the labor market. While it has slowed over the past year, job growth has remained positive and claims for unemployment insurance benefits are low.
The economy added 130,000 jobs in January, and the unemployment rate ticked down a tenth of a percentage point to 4.3%, according to the Bureau of Labor Statistics.
Still, a revision to the past year’s data showed that payroll employment was 1 million lower at the end of 2025 than previously thought. Average monthly payroll growth for 2025 was revised down from roughly 50,000 to 15,000.
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Inflation has also fallen over the past year, but is still — concerningly — running above the central bank’s 2% goal.
Inflation fell three-tenths of a percentage point to 2.4% for the year ending in January, according to the most closely watched consumer price index. Core inflation, a measure that strips out volatile food and energy prices, fell one-tenth of a percentage point to 2.5% for the year ending in January.
