US economic growth was much worse than expected, core inflation accelerated

GDP in the U.S. grew only 1.4% in the fourth quarter of 2025, while economists surveyed by Dow Jones expected the economy to expand by 2.5%, CNBC writes. The release was delayed due to the shutdown of federal agencies. In the third quarter of 2025, the index expanded by 4.4%, significantly beating forecasts.

The core personal consumption expenditures (PCE) index, which does not take into account volatile food and energy prices and is therefore the US Federal Reserve's preferred inflation indicator, rose by 3% year-on-year in December and by 0.4% month-on-month, according to data from the US Bureau of Economic Analysis (BEA).

This matched the Dow Jones consensus, CNBC reports, but was more than analysts polled by Reuters had expected. They had forecast the core index to rise by 2.9%. In November, Core PCE added 2.8%.

The year-over-year increase in the overall spending index was 2.9 percent, which was also one percentage point higher than economists' forecasts, CNBC reported.

Futures on the major U.S. stock indices, which had been in the red zone since the morning, tried to turn around shortly before the Bureau's release, but then went down again. At the time of publication of this text exchange contracts on the S & P 500 and Dow Jones cheapened by more than 0.2%, futures on the Nasdaq Composite lost 0.4% at once.

Prior to the release of the personal spending and GDP data, traders were estimating a 94% probability of the interest rate remaining at current levels following the Fed's March 18 meeting, according to market sentiment monitoring tool FedWatch.

This article was AI-translated and verified by a human editor