Q4 GDP and Durable Goods Fall Short of Expectations

Market Update: Friday, March 13, 2026

Today is Friday the 13th, with the Ides of March just around the corner. While the date may be ominous for some, this morning's release of a wealth of economic indicators has actually lifted pre-market futures, hinting at optimism as we approach the start of spring.

Q4 GDP Revised Down Significantly

The latest revision for fourth-quarter Gross Domestic Product (GDP) shows growth slowing to just 0.7%, half the rate initially reported and the lowest since the first quarter of the year. This adjustment brings the average GDP growth for 2025 to 2.1%, down from 2.4% in 2024, despite a strong 4.4% in last year’s third quarter.

The sharp downward revision is likely due to the impact of the government shutdown now being reflected in the numbers. Consumer spending increased by 2.0%, a drop of 40 basis points from the previous estimate. The Price Index rose to 3.8%, 20 basis points higher than forecast and well above the Federal Reserve’s 2.0% inflation target. Core PCE matched expectations at 2.7%.

January PCE Data Meets Expectations

The delayed report on Personal Consumption Expenditures (PCE)—the Federal Reserve’s preferred inflation measure—showed results largely in line with forecasts for January. The headline PCE rose 0.3% month-over-month, a slight decrease from the previous month, and was up 2.8% year-over-year, just below expectations and last month’s 2.9%.

Core PCE increased by 0.4% for the second consecutive month, as anticipated, and climbed to 3.1% year-over-year—the highest since March 2024. Most of 2025 saw this figure at 2.8% or lower, but this marks the second straight month above 3%. Personal income and spending both rose by 0.4% in January, with income down 10 basis points and spending up by the same amount. Adjusted for inflation, real spending edged up 0.1%. While these figures are solid given the inflationary environment, they reflect past conditions; the true challenge will be how the economy responds to the ongoing conflict in Iran.

Durable Goods Orders Flat in January

Another delayed release, January’s Durable Goods Orders, showed no growth, holding steady at 0.0%. This is an improvement from the previous month’s revised -0.9%, but well below analyst expectations of a 1.3% increase. Excluding transportation, orders rose 0.4%, also missing forecasts and down from December’s upwardly revised 1.3%.

Core business investment, measured by non-defense capital goods excluding aircraft, was unchanged, falling short of the expected 0.5% gain and down from the prior month’s revised 0.8%. Shipments also underperformed, declining by 0.1% compared to an anticipated 0.4% increase, matching the lowest level seen since August last year.

Stock Market Outlook for Today

Geopolitical tensions in Iran, particularly around the vital Strait of Hormuz—a passageway for 20% of the world’s oil—remain a key concern for investors. Meanwhile, the latest JOLTS report is expected to show job openings rising to 6.7 million for January, and preliminary consumer sentiment for March is forecast to dip slightly to 55.3 from 56.6 in February.