The U.S. economy tapped the brakes as 2025 came to a close. Here are five things we learned from U.S. economic data released during the week ending February 20.
The U.S. economic growth slowed during Q4. The Bureau of Economic Analysis’s initial estimate of fourth quarter 2025 Gross Domestic Product (GDP) shows the U.S. economy growing by 1.4 percent at a seasonally adjusted annualized rate. This is significantly below Q3’s 4.4 percent advance and 2025’s 2.2 percent GDP growth rate. The U.S. economy expanded by 2.9 percent in 2023 and 2.8 percent in 2024. In Q4, the main contributors to economic growth, in order, were consumer spending (adding 158 basis points to GDP), nonresidential fixed investment (+51 basis points), state and local government expenditures (+25 basis points), changes in private inventories (+21 basis points), and net exports (adding eight basis points). Reduced federal government spending subtracted 115 basis points from GDP growth, mainly due to the budget impasse-induced shutdown in October and November, while residential fixed investment reduced GDP by another six basis points.
Personal spending grew modestly in December, while inflation picked up. Real Personal Consumption Expenditures (PCE) edged up by a seasonally adjusted 0.1 percent, half of November’s 0.2 percent gain. The Bureau of Economic Analysis report indicates that spending on goods fell 0.5 percent, with declines in both durables (-0.9 percent) and nondurables (-0.3 percent). Services expenditures increased 0.3 percent. Without adjusting for inflation, nominal PCE grew 0.4 percent (matching November’s increase), supported by 0.3 percent increases in both nominal personal and disposable income. Real disposable income remained unchanged in December. The savings rate continued to decline, dropping 0.1 percentage points to +3.6 percent (December 2024: +4.9 percent). The Federal Reserve’s preferred inflation measure, the PCE price index, rose 0.4 percent, double its November increase. Excluding food and energy, the core PCE price index also increased by 0.4 percent. Over the past year, the PCE price index has risen 2.9 percent, with the core measure up 3.0 percent.
Manufacturing output jumped in January. The Federal Reserve reports that manufacturing output rose by a seasonally adjusted 0.6 percent after remaining steady in December. Durable goods production grew by 0.8 percent with increases across most industry segments, while the nondurable sector experienced a 0.4 percent gain. Overall industrial production jumped by 0.7 percent following December’s 0.2 percent increase. Mining output declined by 0.2 percent, while utilities saw output rise by 2.1 percent, thanks to winter weather conditions across much of the country. Manufacturing output was up by 2.4 percent from a year earlier, and overall industrial production grew by 2.3 percent over the same 12-month period.
Imports grew in 2025. In December, exports fell 1.7 percent to a seasonally adjusted $287.3 billion, while imports rose 3.6 percent to $357.6 billion. The resulting trade deficit of $70.3 billion left the Census Bureau and Bureau of Economic Analysis measure up 32.6 percent from November. Goods deficits increased by $15.7 billion to $99.3 billion, while the services surplus decreased by $1.6 billion to $29.0 billion. This included declines in exports of nonmonetary gold and increases in imports of industrial supplies, computer accessories, and telecommunications equipment. The U.S. had its largest goods deficits with Taiwan, Vietnam, and Mexico. The trade deficit for 2025 was $901.5 billion, down a paltry 0.2 percent from the previous year. Imports rose 4.8 percent to $4.334 trillion, while exports increased 6.2 percent to $3.433 trillion.
Consumer sentiment was stable in February. The University of Michigan Index of Consumer Sentiment increased by 0.2 points to 56.6 (1966Q1=100). The index remains 12.5 percent below its year-ago reading. Both current and expected conditions indices are at 56.6. The current conditions index gained 1.2 points but was down 13.8 percent from a year earlier, while the expected conditions index fell 0.4 points to 56.6 (-11.6 percent compared to February 2025). Inflation expectations plummeted (albeit still high), with one-year anticipated inflation at +3.4 percent (a decrease of 0.6 percentage points).
- Other U.S. economic data released over the past week:
- Jobless Claims (Week ending February 14, 2026, First-Time Claims, seasonally adjusted): 206,000 (-23,000 vs. the previous week, -18,000 vs. the same week a year earlier). 4-week moving average: 219,000 (+0.6% vs. the same week a year earlier).
- New Home Sales (December 2025, Single-Family Home Sales, seasonally adjusted annualized rate): 745,000 (-1.7% vs. November 2025; +3.8% vs. December 2024).
- Housing Starts (December 2025, Privately-Owned Housing Starts, seasonally adjusted annualized rate): 1.404 million (+6.2% vs. November 2025; -7.3% vs. December 2024).
- Housing Market Index (February 2026, Index (>50 = “The majority of builders feel confident about the current and near-term outlook for housing,” seasonally adjusted): 36 (January 2025: 37; February 2025: 42).
- Pending Home Sales (January 2026, Index (2001=100), seasonally adjusted): 70.9 (-0.8% vs. December 2025; -0.4% vs. January 2025).
- FOMC Minutes
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What We Learned About the U.S. Economy Last Week 