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U.S. economy expanded at sluggish 0.7% in fourth quarter, government says, downgrading first estimate

The U.S. economy, hobbled by last fall’s 43-day government shutdown, advanced at an unexpectedly sluggish 0.7 per cent annual rate from October through December, the Commerce Department reported Friday in a big downgrade of its initial estimate.

Mar 13, 2026 &03221313202631; 18:22 UTC www.bnnbloomberg.ca Trending 3/5

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Negative for markets

Sentiment score: -65/100

High impact Immediate effect (hours)

WHAT THIS MEANS

The U.S. economy contracted significantly to 0.7% annualized growth in Q4, a major downgrade from initial estimates, primarily due to the 43-day government shutdown in fall. This sluggish performance signals economic weakness and may prompt the Federal Reserve to maintain accommodative monetary policy longer than previously anticipated.

AI CONFIDENCE

85% Very high

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

↓

S&P 500

^GSPCIndex

Expected to decline

Weak GDP growth reduces corporate earnings expectations and may trigger risk-off sentiment

↓

Euro Stoxx 50

^STOXX50EIndex

Expected to decline

European equities pressured by U.S. economic weakness affecting global growth outlook

↑

Euro / US Dollar

EURUSDCurrency

Expected to rise

Weak U.S. growth supports dollar weakness as Fed may delay rate hikes

↓

10-Year Treasury Yield

^TNXBond

Expected to decline

Treasury yields likely to decline as market prices in lower growth and potential rate cuts

↑

Gold Futures

GC=FCommodity

Expected to rise

Safe-haven demand increases amid economic weakness concerns

PRICE HISTORY

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⚡ SUGGESTED ACTION

Consider reducing equity exposure and rotating into defensive sectors and safe-haven assets. Long USD weakness (EURUSD long) and long Treasury bonds as growth concerns may prompt Fed accommodation.

KEY SIGNALS

GDP downgrade signals economic decelerationGovernment shutdown impact on economic activityPotential Fed policy shift toward accommodationRisk-off market sentiment likelyEarnings revision cycle may begin

SECTORS INVOLVED

FinancialsTechnologyConsumer DiscretionaryIndustrials

Analysis generated on Mar 16, 2026 at 13:36 UTC

Disclaimer: This analysis is generated by artificial intelligence for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation. Original reporting by BNN Bloomberg. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

U.S. economy expanded at sluggish 0.7% in fourth quarter, government says, downgrading first estimate

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