US Q4 GDP data just came in, and it’s significantly worse than expected.
Expected: 3.0%
Actual: 1.4%
This marks the second weakest GDP print in the last two years.
The slowdown in economic momentum is now undeniable.
What makes the situation more concerning is inflation data:
Both the PCE Price Index and Core PCE came in above expectations, showing that prices for goods and services are still rising.
This creates a dangerous setup:
The economy is slowing
Job pressure is increasing
Cost of living remains elevated
The Fed now faces a policy trap:
If the Fed eases, inflation risks accelerating.
If the Fed stays hawkish, economic conditions deteriorate further.
If the Fed does nothing, both consumers and markets suffer.
This is a textbook setup for stagflation risk.
Macro conditions are tightening, volatility is likely to rise, and markets should not ignore this signal.
Stay alert.