Economic Data Overview - The second print for Q4 GDP shows a significant reduction to +0.7%, which is half of the initial estimate, leading to a revised average GDP forecast of +2.1% for 2025, down from +2.4% in 2024 [2] - Consumption growth decreased to +2.0%, down 40 basis points from previous estimates, while the Price Index increased to +3.8%, exceeding expectations by 20 basis points [3] Inflation Metrics - The January Personal Consumption Expenditures (PCE) report indicates a headline increase of +0.3% month-over-month and +2.8% year-over-year, which is 10 basis points lower than expected [4] - Core PCE remained steady at +0.4% for the second consecutive month, with a year-over-year increase to +3.1%, marking the highest level since March 2024 [5] Consumer Spending and Income - Personal Income and Spending for January both reported an increase of +0.4%, with real spending adjusted for inflation at +0.1%, indicating stable performance in the current inflationary environment [6] Durable Goods Orders - Durable Goods Orders for January were flat at 0.0%, which is an improvement from the previous month's revised figure of -0.9%, but below the expected +1.3% [7] - Non-defense, ex-aircraft orders also remained flat, down from the anticipated +0.5%, following a revised +0.8% from the previous month [8] Market Expectations - The geopolitical situation in Iran, particularly concerning the Strait of Hormuz, is a significant concern as it affects global oil supply, which could impact market dynamics [9] - Job openings are expected to rise to 6.7 million in January, while preliminary Consumer Sentiment for March is projected to decrease slightly to 55.3 from 56.6 [9]

Core Insights - Inflation remained above the Federal Reserve's 2% target in January, with a year-over-year increase of 2.8% and a core measure (excluding food and energy) rising by 3.1% [1][1][1] - The inflation data for January was close to expectations, but the ongoing Iran conflict has led to rising energy prices, complicating the Fed's monetary policy decisions [1][1][1] Economic Implications - The core PCE price index's increase to 3.1% is significant as it is the Fed's benchmark for assessing inflation, indicating persistent inflationary pressures at the start of the year [1][1][1] - Economists predict inflation will accelerate in the coming months, potentially reaching around 4.5%, driven by rising gasoline prices and other commodity costs due to supply disruptions from the Iran war [1][1][1]

Economic Data Summary - Q4 GDP was revised down to +0.7%, which is half of the initial print, leading to an average GDP for 2025 of +2.1%, down from +2.4% in 2024 [2][8] - Consumption growth decreased to +2.0%, down 40 basis points from previous estimates, while the Price Index increased to +3.8%, exceeding expectations by 20 basis points [3] - Core PCE inflation remained stable at +2.7%, aligning with expectations, but overall inflation indicators suggest a higher trend than the Fed's target [3][5] Personal Consumption Expenditures (PCE) - January PCE report showed a headline increase of +0.3%, slightly lower than expected, with a year-over-year rate of +2.8%, which is 10 basis points below expectations [4] - Core PCE remained at +0.4% for the second consecutive month, with a year-over-year increase to +3.1%, the highest since March 2024 [5] Personal Income and Spending - Personal Income and Spending for January both reported +0.4%, with real spending adjusted for inflation at +0.1%, indicating stable economic conditions despite inflationary pressures [6] Durable Goods Orders - Durable Goods Orders for January were flat at 0.0%, which was below the expected +1.3%, while non-defense orders also fell short of expectations [7][9] - Shipments decreased by -0.1%, contrasting with expectations of +0.4%, marking a near-term low similar to levels seen in August of the previous year [9] Market Expectations - Ongoing geopolitical tensions, particularly regarding Iran and the Strait of Hormuz, are influencing market sentiment, with expectations for job openings to rise and consumer sentiment to slightly decline [10]

The U.S. reported that core PCE rose 3.0% year over year and 0.4% month over month in December 2025, while headline PCE increased 2.9% year over year. Personal income and consumer spending grew 0.3% and 0.4% month over month, respectively. ...

Core Insights - The Fed's inflation benchmark is expected to worsen, with consumer prices measured by Personal Consumption Expenditures (PCE) projected to rise 2.8% over the 12 months through December, and core PCE forecasted to increase to 3.0% from 2.8% in November [1][2][7] - The anticipated rise in core PCE inflation is significant as it is the measure the Federal Reserve uses to assess its 2% annual inflation target [2][4] - Financial markets are currently predicting a quarter-point cut in the Fed's key fed funds rate by June, but clarity on inflation trends is needed before any rate cuts can be made [5][6] Economic Implications - Persistently high inflation is negatively impacting household budgets and maintaining elevated interest rates [3] - Some economists, such as those at Goldman Sachs, predict that the annual PCE measure will continue to rise as companies pass on tariff costs to consumers, with core PCE potentially reaching 3.05%, the highest since March 2024 [4] - The Federal Reserve will closely monitor upcoming inflation data, particularly PCE, to determine whether to lower borrowing costs to stimulate the job market or maintain higher rates to control inflation [4][6]

Economic Data - Markets experienced a rise, with the Dow gaining 306 points (+0.63%), S&P 500 up 37 points (+0.55%), Nasdaq increasing by 211 points (+0.91%), and Russell 2000 growing by 17 points (+0.64%) [1] - The delayed November Personal Consumption Expenditures (PCE) report indicated Personal Spending increased by 0.3%, which was 10 basis points lower than expected, following a previous drop of 30 basis points to 0.1% [2] - Year-over-year PCE rose to 2.8%, recovering from a 10 basis point dip the prior month, with core PCE also reflecting the same year-over-year increase [3] Company Earnings - Intel (INTC) reported earnings of 15 cents per share, nearly doubling the anticipated 8 cents, with revenues of $13.67 billion surpassing the Zacks consensus of $13.37 billion; however, shares fell by 6.5% due to lowered revenue guidance amid ongoing supply constraints [4] - Intel's Data Center segment grew by 9% year-over-year to $4.7 billion, despite a 7% decline in Cloud computing [5] - Capital One (COF) missed Q4 earnings estimates at $3.86 per share compared to the expected $4.12, but revenues of $15.58 billion exceeded the $15.37 billion forecast; the company also announced the acquisition of AI-based FinTech Brex for $5.15 billion [6] - CSX (CSX) saw its share price increase despite missing Q4 earnings estimates, reporting earnings of 39 cents per share, which was 3 cents below consensus, and revenues of $3.51 billion, slightly below the expected $3.55 billion, attributed to subdued industrial demand [7]

Core Viewpoint - The article discusses the economic impact of tax cuts and market optimism during Trump's presidency, as presented by economist Larry Kudlow, who attributes significant growth in GDP and business investment to these policies [1][2]. Group 1: Economic Growth Indicators - U.S. GDP grew by 3.8% in the second quarter of Trump's presidency, a notable recovery from a -0.6% decline in the previous quarter, which Kudlow interprets as evidence of the effectiveness of Trump's tax bill [1]. - Business investment saw an increase of 8.5%, which Kudlow attributes to the tax bill allowing immediate write-offs for new machinery and computers [2]. - There was a 16% rise in new business startups, a statistic sourced from the St. Louis Federal Reserve, indicating a surge in entrepreneurial activity [2]. Group 2: Stock Market Performance - The S&P 500 index increased by 32% and the Nasdaq by 46% since early April, which Kudlow uses as further evidence of economic confidence and investment [2]. Group 3: Critique of Claims - The tax bill was not signed until after the second quarter ended, suggesting that businesses could not have anticipated its effects when making spending decisions [4]. - Kudlow's reference to a GDP deflator of 2.1% as an indicator of inflation is challenged, as it does not reflect the actual cost of living experienced by consumers, who are more affected by the Consumer Price Index (CPI) or Personal Consumption Expenditures (PCE) [5].

Core Insights - The U.S. stock market showed positive movement with major indexes rising, particularly the Dow, S&P 500, and Russell 2000, following favorable economic reports [2][3][4] Economic Data - The UM Consumer Sentiment survey for August reported a score of 55.1, slightly below the expected 55.4 [1] - Expectations for future inflation decreased, with 1-year expectations at 4.7% (down from 4.8% expected) and 5-10 year expectations at 3.7% (down from 3.9% expected) [2] - Personal Consumption Expenditures (PCE) rose by 0.2%, aligning with expectations, while Personal Income increased by 0.4%, also as anticipated [3][4] Market Performance - As of the market opening, the Dow led with a gain of 0.69%, followed by the S&P 500 (+0.46%), Russell 2000 (+0.21%), and Nasdaq (+0.17%) [3] - A significant portion of equities, 55.1% (3,054), were trading in the green, while 37.2% (2,062) were declining [3]

Market Performance - The blue-chip Dow index closed down 173 points, a decrease of 0.38% for the day [2] - The S&P 500 fell by 33 points, or 0.50%, while the Nasdaq also dropped by 0.50%, losing 113 points [2] - The small-cap Russell 2000 decreased by 25 points, representing a decline of 1.05% [2] - Bond yields are rising, with the 10-year yield at 4.17% and the 2-year yield at 3.66% [2] Economic Indicators - Existing Home Sales surged by 20.5% in August, totaling 4.00 million seasonally adjusted annualized units, slightly below expectations of 4.01 million but above the consensus estimate of 3.96 million [3] - The Midwest region experienced the largest gains in home sales, although the median home price there is 22% lower than the national median [3] Company Earnings - Costco reported fiscal Q4 earnings of $5.87 per share, exceeding the Zacks consensus of $5.81, but revenues were slightly below expectations at $86.16 billion compared to the anticipated $86.18 billion [4] - This marks the third earnings beat for Costco in the last four quarters, yet shares are down slightly in late trading, with a year-to-date increase of around 3% [4] Upcoming Economic Data - The Personal Consumption Expenditures (PCE) report is anticipated to impact the stock market, with the August data set to be released before the market opens on Friday [5] - Personal Income is expected to cool to 0.3% in August from 0.4% the previous month, while Personal Spending is projected to remain steady at 0.5% [6] - The PCE Index is forecasted to increase by 0.3% month over month for the headline and 0.2% for the core, with year-over-year PCE expected to rise by 10 basis points to 2.7% [6][7]

Economic Overview - Pre-market futures are improving following the release of major economic numbers, despite a drawback in EU markets due to rising unemployment and inflation in Germany [1] - U.S. indexes are experiencing volatility, with the small-cap Russell 2000 showing gains while other major indexes remain in the red [1] PCE and Inflation Metrics - July Personal Consumption Expenditures (PCE) figures were in-line with expectations, indicating no hindrance to the anticipated 25 basis point rate cut for the September Fed meeting [2] - Personal Income for July increased by 0.4%, the strongest since April, while Personal Spending rose by 0.5%, marking the highest increase since March [3] - The headline PCE Index showed a month-over-month increase of 0.2%, the lowest since May, with a year-over-year increase of 2.6%, consistent with the previous month [4] - Core PCE, excluding food and energy, increased by 0.3% month-over-month and 2.9% year-over-year, indicating stability in inflation metrics [5] Employment and Economic Indicators - Fed Chair Jerome Powell's focus has shifted from inflation to employment concerns, with July's non-farm payrolls showing an increase of 73K, which is below the previous four-month average of 54K [8] - A significant upward revision in PCE would be necessary to alter the current outlook, as weakening employment is influencing the decision for a rate cut [9] Trade and Inventory Data - Advanced Trade in Goods for July reported a deficit of $103 billion, which was more than $10 billion lower than anticipated [10] - Advanced Retail Inventories and Wholesale Inventories both reported a month-over-month increase of 0.2%, indicating stable inventory levels [11] Market Expectations - The upcoming week will feature new jobs reports, including July JOLTS numbers and private-sector payrolls from ADP, leading up to the significant BLS non-farm payrolls report [12]