While recent economic reports from Japan and Europe have been encouraging, the latest figures out of the United States fell short of expectations in two key areas.

First, the Gross Domestic Product for Q4 expanded at an annualized rate of just 1.4%. This represents a significant decline from the 4.4% growth seen in Q3 and misses the consensus prediction of 2.8% by a notable margin. As a result, the growth rate for the full year of 2025 sits at 2.2%, a decrease from the 2.8% achieved in 2024. Analysts will likely scrutinize the weak data surrounding government impulse and personal consumption, while political discussions are expected to revolve around the consequences of the recent government shutdown.

Second, inflation remains sticky. Core PCE, the preferred measure for the Fed, climbed 0.4% for the month. This increase drives the annual rate to 3.0%, which is hotter than the consensus estimate of 2.9%.

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