Growth slows down! The US GDP has been significantly revised downward, with consumer spending increasing by only 0.1% in January, while core PCE continues to rise strongly.

Notice that, economic growth in the United States was confirmed to be weaker than previously reported at the end of last year, and consumer spending in January barely increased. Data from the US Bureau of Economic Analysis on Friday showed that adjusted for inflation, consumer spending increased by 0.1% month-to-month. The core Personal Consumption Expenditures (PCE) price index, a favored inflation gauge by the Federal Reserve which excludes food and energy items, rose strongly by 0.4%. Another report showed that the US economy grew at an annualized rate of 0.7% in the fourth quarter (during which the government experienced the longest shutdown in history), compared to the initial estimate of 1.4%. Consumer, business, and government spending, as well as export data, were all revised downwards, but indicators measuring underlying demand remained relatively stable. Following the release of the reports, US Treasury yields and stock futures rose. The current economic situation is much different, as the conflict with Iran has pushed up energy prices and may potentially affect consumer sentiment. Tax refunds and strong wage growth should provide some support for consumer finances in the coming months. However, economists believe that future spending still carries risks considering the threat of intensified inflation due to the conflict and a fragile job market. Heather Long, Chief Economist at Navy Federal Credit Union, stated in a briefing, "Healthcare, housing, and insurance were the main categories of spending in January. Of course, all of that now seems like ancient history." While the market generally expects Federal Reserve officials to keep interest rates unchanged at next week's policy meeting, the continued rise in inflation pressure could delay the timing of any future rate cuts, as President Trump continues to call for rate cuts.