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By Gabe Whisnant
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A trio of developments delivered a punishing day for President Donald Trump on Friday, as new economic data showed sharply slower growth, inflation came in hotter than expected and the Supreme Court struck down far‑reaching global tariffs central to his economic agenda.
Taken together, the setbacks undercut Trump’s efforts to portray the U.S. economy as booming ahead of his upcoming State of the Union address and highlighted mounting challenges on multiple fronts. The developments hit within hours of one another, combining political, legal and economic pressure as the administration seeks to defend its trade policies while grappling with stubborn price increases and signs of cooling growth.
US GDP: Economy Grew Slower in Fourth Quarter
Fresh government data showed the U.S. economy expanded at a 1.4 percent annual rate in the final three months of last year, a steep slowdown from earlier in 2025. The Commerce Department said growth was dragged down by a six‑week federal government shutdown that slashed public spending, along with softer consumer demand after months of heavy outlays. While economists said underlying consumer and business activity remained mostly resilient, the weaker‑than‑expected report pointed to a more modest growth outlook in the months ahead.
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"The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns! Also, LOWER INTEREST RATES. 'Two Late' [Federal Reserve Chair Jerome] Powell is the WORST!!! President DJT," Trump posted Friday morning on Truth Social.
The slowdown was driven largely by a sharp pullback in government spending during the shutdown, which economists said shaved about a full percentage point off growth. Consumer spending also cooled, rising 2.4 percent after a much stronger showing in the summer, while business investment expanded only modestly outside of spending tied to artificial intelligence (AI). Economists said growth could rebound somewhat in coming quarters as government outlays normalize but warned that rising debt levels and persistent inflation could continue to weigh on momentum.
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Inflation Rose in December: What Data Shows
At the same time, inflation showed renewed momentum, complicating the outlook for interest‑rate cuts. The Federal Reserve’s preferred inflation gauge rose 0.4 percent in December and was up 2.9% from a year earlier, the fastest annual pace since early 2024. Core prices also accelerated, remaining well above the Fed’s 2 percent target and underscoring why many Americans continue to feel squeezed by higher costs despite steady growth and low unemployment.
The report showed price increases were broad‑based, with higher costs for items such as furniture, clothing and groceries, even as gas prices declined. Consumers continued to spend at a steady pace in December, a sign that demand remains strong despite persistent inflation pressures. Federal Reserve officials have said they want clearer evidence that inflation is moving closer to their 2 percent target before cutting interest rates, a stance reinforced by data showing prices are still rising faster than they did before the COVID pandemic.
Supreme Court Strikes Down Tariffs: How Justices Voted
Adding to the setbacks, the Supreme Court ruled 6‑3 that sweeping global tariffs imposed under a 1977 emergency powers law exceeded presidential authority. Writing for the majority, Chief Justice John Roberts said the Constitution “very clearly” gives Congress the power to impose taxes, including tariffs.
Roberts was joined by conservative justices Neil Gorsuch and Amy Coney Barrett, along with all three liberal justices, Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson. Conservative Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissented.
The court did not decide whether companies could recover billions of dollars already paid, even as federal data shows more than $133 billion was collected under the tariffs.
After the ruling, Trump pledged to impose a new global 10 percent tariff under a law that's restricted to 150 days and has never been used to apply tariffs before.
“Their decision is incorrect,” he said. “But it doesn’t matter because we have very powerful alternatives.”
Updates: 2/20/26, 5:55 p.m. ET: This article was updated with new information and remarks.
This article includes reporting by the Associated Press.
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