US economy growth revised down to 0.7% in Q4 2025
The U.S. economy grew at a revised annual rate of 0.7% in the fourth quarter of 2025, according to the Commerce Department, a significant downgrade from the initial estimate of 1.4%. This slowdown, attributed to a 16.7% drop in federal government spending due to a 43-day government shutdown, follows growth rates of 4.4% and 3.8% in the previous two quarters. Consumer spending rose by 2%, down from 3.5% in the third quarter, while business investment increased by 2.2%, reflecting ongoing investments in artificial intelligence.
Analysts Adjust Oil Price Forecasts Amid Iran Conflict
Analysts are reassessing oil price estimates as the ongoing conflict in Iran disrupts global markets, with oil prices rising over 40% since the start of hostilities, reaching above $103 a barrel. In California, gas prices have surged to over $5.30 a gallon, prompting scrutiny of a 2023 law designed to cap refinery profits, which has yet to be implemented due to a five-year delay voted by the California Energy Commission. The situation highlights California's structural issues with fewer refineries and limited supply options, exacerbated by the Iran conflict.
Traders Expect Fed Rate Cut Amid Economic Stagnation
Traders are increasingly anticipating a U.S. Federal Reserve rate cut by September, as Barclays and Goldman Sachs have both revised their forecasts amid rising inflation risks linked to geopolitical tensions in the Middle East. The U.S. economy is facing stagnation, with Fourth Quarter 2025 GDP growth revised down to 0.7% and the Core Personal Consumption Expenditures index remaining at 3.1%, well above the Fed's target. This economic backdrop has led to a surge in the 10-year Treasury note yield to 4.26%, as investors adjust to the likelihood of prolonged high interest rates.
U.S. Stock Markets Decline Amid Surging Oil Prices
U.S. stock indexes declined as the Dow Jones Industrial Average fell 730 points, or 1.5%, while the S&P 500 and Nasdaq dropped 1.5% and 1.7%, respectively, amid rising oil prices that surpassed $100 per barrel. The surge in oil prices, attributed to a supply shortage caused by an Iranian blockade of the Strait of Hormuz, has raised concerns about economic fallout from the ongoing U.S.-Israeli conflict with Iran. Global crude oil prices increased by 9% in one day and have risen 49% over the past month.
US to receive $10 billion from TikTok sale
The U.S. government is set to receive approximately $10 billion from investors as part of the deal for China's ByteDance Ltd. to sell TikTok's American operations to a consortium led by Oracle Corp. and Silver Lake Management LLC. This transaction follows a federal law requiring the divestment of TikTok's U.S. operations, with President Donald Trump facilitating the sale through executive actions.
