US economic growth slows sharply, weighed down by government shutdown

WASHINGTON — The U.S. economy grew at a 1.4% annual rate in the fourth quarter, according to Commerce Department data that highlighted the damaging impact of a record-long government shutdown.

For the full year of 2025, the economy expanded by 2.2%, marking its weakest performance since 2022.

The cooling trend extended into the new year as consumer confidence plunged to a decade-low in January. Data also showed that job creation stalled throughout 2025.

These figures sharply contradict previous market optimism. Just last month, analysts projected a fourth-quarter surge fueled by robust spending from wealthy consumers and aggressive business investment in AI.

The Federal Reserve Bank of Atlanta had previously forecasted that GDP growth could reach as high as 5.4%.

Recent economic data reveals a deepening disconnect between Wall Street’s optimistic projections and the prevailing economic reality. The anticipated windfall from artificial intelligence investments and high-end discretionary spending has failed to provide a sufficient buffer against the fallout from the federal government shutdown, exposing the U.S. economy's acute vulnerability to protracted political gridlock in Washington.

A decade-low plunge in consumer confidence serves as a stark warning for the 2026 fiscal outlook, signaling that American households are bracing for a prolonged downturn. This erosion of sentiment complicates the Federal Reserve’s upcoming policy path, placing the central bank under intense pressure as it weighs interest rate adjustments against a backdrop of cooling growth.

For Vietnam, the prospect of a U.S. slowdown and weakening consumer demand poses a direct threat to export-led growth. As a primary supplier of consumer goods—ranging from electronics to textiles—Vietnam is uniquely exposed to a contraction in American purchasing power. A sustained decline in order volumes from U.S. buyers would likely trigger a ripple effect across the Vietnamese manufacturing sector, impacting domestic production targets and employment stability.

Slowing economic growth and dipping consumer confidence are hitting Vietnamese-American small businesses hard, particularly in the nail salon industry, phở restaurants, and retail. As households tighten their belts, non-essential services are often the first to be cut, leading to a direct slump in revenue. For entrepreneurs in hubs like Little Saigon, this economic pressure often necessitates hiring freezes or even staff reductions. This stagnation in job creation means fewer opportunities for workers within the community and places an added burden on families trying to manage everything from daily expenses and remittances to the financial requirements of visa categories like F2B, H-1B, TPS, or EB-5.