Economic Growth - The US GDP rose at an annualized rate of just 1.4% in Q4 2025, significantly below the expected 2.5% [1][7] - For the full year of 2025, the US economy grew at a pace of 2.2%, down from 2.8% in 2024 [2] Inflation Metrics - The Fed's preferred inflation gauge, the PCE price index, increased to 2.9% in December, surpassing estimates of 2.7% [4][11] - The core PCE, excluding food and energy prices, rose 3% over the past year, indicating inflation reduction efforts have stalled [5] Federal Reserve Policy - Recent economic reports suggest the Federal Reserve may be reluctant to cut interest rates further this year [6] - The disappointing GDP report is expected to prolong disagreements among Fed policymakers regarding interest rate decisions [5] Government Impact - The GDP decline was partially attributed to a government shutdown, which influenced consumer spending and exports [7][10] - Government spending and investment fell by 5.1%, largely due to a 16.6% drop in federal spending during the shutdown [10] Economic Indicators - Despite the slowdown, final sales to private domestic purchasers rose by 2.4%, and gross private domestic investment increased by 3.8% [10]
As US economy drastically slows, Fed's preferred inflation gauge stays hot – likely putting rate cuts on hold
New York Post·2026-02-20 19:18