US Q4 GDP Growth Slows to 1.4% Amid Government Shutdown; Annual Growth at 2.2%

The U.S. economy expanded by 1.4% in the fourth quarter, missing the 2.5% analyst forecast and bringing the total growth for the year to 2.2%. This slowdown was partially attributed to the impact of a government shutdown, which weighed on economic activity during the final months of the year. Investors are also closely monitoring the core PCE price index, which is expected to show a 3% annual increase for December. The combination of weaker-than-expected growth and fiscal disruptions has fueled speculation that the Federal Reserve (Fed) may adopt a more dovish monetary policy stance. In response, the U.S. dollar faced selling pressure against major pairs like EUR/USD and USD/JPY. Meanwhile, market participants remain cautious, tracking movements in Treasury yields (US10Y) and the SPY index as they assess the broader economic outlook.