The U.S. economy almost stalled, but inflation still stayed too hot for an easy Fed rescue

The U.S. economy entered 2026 with far less momentum than markets had priced in a few months earlier. According to the Bureau of Economic Analysis, fourth quarter 2025 GDP growth was revised down to 0.5%, a sharp step down from the 4.4% pace recorded in the third quarter. On its own, that revision would usually support the view that the Federal Reserve is moving closer to rate cuts. The problem is that inflation has …