US Q4 GDP Growth Slows to 1.4%, Missing Expectations

Fourth Quarter GDP Performance

• 📉 Fourth-quarter U.S. GDP came in at a disappointing 1.4%, significantly below the expected 2.8% estimate.
• ⚠️ This growth rate is the lowest since the first quarter of 2025, when GDP was slightly negative.

Consumer Spending and Income Data

• 🛍️ Consumer spending met expectations, rising by 2.4%, though this is a full percentage point lower than the previous quarter.
• 📊 Personal income increased by 0.3%, exactly as anticipated.
• 🛒 Personal spending saw a 0.4% rise, which was one-tenth better than expected.
• 💡 Real spending, adjusted for inflation, was up 0.1%, matching expectations but marking a low point not seen since May of the previous year.

Inflationary Metrics

• 📈 The PCE pricing index showed a 3.6% increase, much higher than the expected 2.8% and unchanged from the first quarter.
• ⚠️ The PCE core pricing index registered 2.7%, slightly hotter than the 2.6% expected and higher than the previous month's 2.9%.
• 💰 Month-over-month, the PCE pricing index was 0.4%, hotter than anticipated and double the previous month's rate.
• 📊 Year-over-year PCE inflation was 2.9%, with the core year-over-year PCE at 3.0%, the highest level since April of the previous year.

Market Reaction and Yields

• 📉 Markets reacted by pushing yields lower, with the two-year Treasury yield hovering around 3.46% and the 10-year yield at 4.06%.
• 🎢 Equities futures showed a slight decline, with the Dow futures down over 110 points, indicating a cautious market sentiment.