Economic Resilience Amid Government Cuts and Tariff Challenges

U.S. economic growth slowed in the fourth quarter due to significant government spending cuts, but consumer and business investment remained strong. Inflation is rising partly because of tariffs, and despite government shrinkage, the economy is supported by consumer spending and business investment, particularly in artificial intelligence.

The U.S. economy experienced an unexpected slowdown in the fourth quarter as federal government spending dropped significantly, marking the largest decline since 1972. Despite this, steady consumer spending and business investments cushioned the economy's overall performance, showcasing its resilience amid challenges.

President Donald Trump highlighted the economic impact of the previous year's shutdown, attributing a two-point drop in GDP to it. However, with inflation on the rise due to Trump's tariffs and recent Supreme Court rulings against them, uncertainties remain. The Federal Reserve is expected to maintain interest rates, given the current economic circumstances.

Consumer spending, which constitutes a major part of the U.S. economy, grew robustly, though rising prices and a shrinking savings rate are concerns for lower-income households. Meanwhile, business investments in artificial intelligence bolstered economic activity, even as traditional sectors like manufacturing faced downturns.