Contradictory Picture in the US Economy: Growth Slows as Inflation Exceeds Expectations

Significant Loss of Momentum in Economic Growth The US economy recorded an annualized growth rate of 1.4 percent in the fourth quarter of 2025.
This figure fell significantly short of the market expectation of 2.8 percent, signaling a clear loss of momentum in economic activity.
For the full year of 2025, the national economy grew by 2.2 percent, lagging behind the 2.8 percent performance recorded in 2024.
While increases in consumer spending and investments were the primary drivers of growth in the final quarter, declines in government spending and exports partially offset these gains.
During the same period, a decrease was observed in imports, which had a negative impact on growth.
Fed's Critical Inflation Indicator on the Rise The core personal consumption expenditures (PCE) price index, considered a critical indicator for the Federal Reserve's inflation tracking, increased by 0.4 percent monthly and 3 percent annually in December.
Market expectations were for a 0.3 percent monthly and 2.9 percent annual increase.
These figures, which exclude food and energy items, pointed to the continuation of inflationary pressures.
During the same period, personal income rose by 0.3 percent, in line with expectations, while personal consumption expenditures increased by 0.4 percent on a monthly basis.
The general personal consumption expenditures price index recorded an increase of 2.9 percent in the last quarter of 2025.
Government Shutdown and Market Reaction The longest federal government shutdown in US history, which began on October 1, 2025, and lasted 43 days, also affected the release schedule of economic data.
Following the announcement of the data, volatility was observed in the markets.
Spot gold, which was trading around $5,030 before the data, retreated to $5,018.
The dollar index rose from 97.7 to 97.9, while silver prices fell from $80.67 to $80.15 before stabilizing again around the $80.6 level.