Latest / Markets with Megan: A Quick Financial Markets Update / Warning Signs? 3% Inflation and Weak Growth | S3 E123 | 02-20-26

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Warning Signs? 3% Inflation and Weak Growth | S3 E123 | 02-20-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: What was a bit of some disappointing economic news this morning?
• 0:03
  Megan Horneman: It is Friday, February the 20th, and this is Markets with Megan.
• 0:06
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• 0:09
  Megan Horneman: Hit that alarm bell.
• 0:10
  Megan Horneman: You can also share with any friends, family, or colleagues that might be interested on that economic data that you see in the news headlines and what it means for your investments.
• 0:19
  Megan Horneman: Let's break down what we got this morning.
• 0:21
  Megan Horneman: First, we got the fourth quarter reading of GDP, and it came in much weaker than expected.
• 0:27
  Megan Horneman: The US economy only rose 1.4%.
• 0:30
  Megan Horneman: Now again, this is subject to revisions, but the first reading here is that it rose 1.4%.
• 0:36
  Megan Horneman: It was worse than the expectation, which was 2.8%.
• 0:39
  Megan Horneman: And just remember that a few weeks ago, the Atlanta Fed GDP now model had showed that we may see growth of upwards of 5%.
• 0:47
  Megan Horneman: So much weaker than expected.
• 0:49
  Megan Horneman: It was primarily led by federal consumption.
• 0:51
  Megan Horneman: That was the worst quarterly drop since the third quarter of 2020.
• 0:56
  Megan Horneman: Remember, we had the longest U.S.
• 0:58
  Megan Horneman: government shutdown on record during the fourth quarter of last year.
• 1:01
  Megan Horneman: We also saw consumption, personal consumption, which usually drives GDP.
• 1:07
  Megan Horneman: It was weak, not awful, but it was the slowest since we had that first quarter drop in GDP of last year, primarily led by a decline in auto sales.
• 1:17
  Megan Horneman: CapEx spending continued to be strong, but it was primarily due to the intellectual property and prime and specifically software and research and development.
• 1:26
  Megan Horneman: And when we look at net exports that have been in focus because of the tariffs, that was relatively flat.
• 1:32
  Megan Horneman: Now, alongside this report, we also got December inflation data.
• 1:35
  Megan Horneman: And the reason why we think that the data in general was disappointing is because we had a weaker GDP, but we also had hotter than expected inflation.
• 1:43
  Megan Horneman: So core inflation rose two point, I'm sorry, rose 3% on a year-over-year basis.
• 1:49
  Megan Horneman: It was 2.9%.
• 1:51
  Megan Horneman: The super core that excludes some of the volatile items like housing, that was up three tenths on an annualized basis over the past three months.
• 2:00
  Megan Horneman: That core inflation is now up 3.1% versus 2.4% the prior month.
• 2:07
  Megan Horneman: And it's not just services where we've saw the inflation pressures.
• 2:11
  Megan Horneman: And that has been a primary focus on inflation for a long time now, but we did see a big jump in the inflation on durable goods.
• 2:21
  Megan Horneman: And that could have been primarily due to auto prices rising.
• 2:25
  Megan Horneman: So that's all that we have today.
• 2:27
  Megan Horneman: The markets didn't necessarily were weaker on this because of the weaker economic trajectory.
• 2:32
  Megan Horneman: They've turned around today.
• 2:33
  Megan Horneman: We do have some news coming up from the Supreme Court Court on Trump's tariffs.
• 2:37
  Megan Horneman: We'll be back on Monday when we dig through all those details to give you some of our thoughts on what that means for the future of tariffs and as well as the markets.
• 2:46
  Megan Horneman: Thank you very much.
• 2:47
  Megan Horneman: If you want a history of our podcast, you can go to marketswithmegan.