US economic growth slumps to 0.7% in fourth quarter, stoking inflation worries

The US economy grew at a significantly slower pace than initially estimated for the final months of 2025, government data showed on Friday, a major downgrade that comes as fallout from war in the Middle East looms.US gross domestic product rose at an annual rate of 0.7 per cent in the fourth quarter, the Commerce Department said.This was sharply down from its earlier estimated 1.4 per cent over the October to December period.It also indicates that the world’s biggest economy was on a weaker footing than anticipated ahead of US-Israeli strikes targeting Iran on February 28 that have since plunged the crude-rich region into war.Already, the conflict has roiled energy markets and sent fuel prices surging, fanning worries about inflation.In the fourth quarter, the growth adjustment reflected “downward revisions to exports, consumer spending, government spending, and investment”, the Commerce Department said.