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US economic growth slumps to 0.7% in fourth quarter, stoking inflation worries

The US economy grew at a significantly slower pace than initially estimated for the final months of 2025, government data showed on Friday, a major downgrade that comes as fallout from war in the Middle East looms. US gross domestic product rose at an annual rate of 0.7 per cent in the fourth quarter, the Commerce Department said. This was sharply down from its earlier estimated 1.4 per cent over the October to December period. It also indicates that the world’s biggest economy was on a weaker...

Mar 13, 2026 &03491313202631; 14:49 UTC www.scmp.com Trending 4/5

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Negative for markets

Sentiment score: -75/100

High impact Immediate effect (hours)

WHAT THIS MEANS

US Q4 2025 GDP growth revised sharply downward to 0.7% from 1.4%, signaling economic weakness and raising inflation concerns amid Middle East geopolitical tensions. This significant downgrade suggests the world's largest economy is decelerating faster than previously anticipated, with potential ripple effects across global markets.

AI CONFIDENCE

85% Very high

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

↓

S&P 500

^GSPCIndex

Expected to decline

Weaker US economic growth reduces corporate earnings expectations and increases recession risk

↓

Euro Stoxx 50

^STOXX50EIndex

Expected to decline

European equities pressured by US economic weakness and reduced global demand outlook

↑

Euro / US Dollar

EURUSDCurrency

Expected to rise

Weaker US growth may prompt Fed rate cuts, weakening the dollar relative to euro

↓

10-Year Treasury Yield

^TNXBond

Expected to decline

Lower growth expectations drive flight-to-safety demand for US Treasuries, pushing yields lower

↓

Oil (WTI Crude)

CL=FCommodity

Expected to decline

Slowing economic growth reduces energy demand; geopolitical premium may provide support

↑

Gold Futures

GC=FCommodity

Expected to rise

Safe-haven demand increases amid economic weakness and geopolitical uncertainty

PRICE HISTORY

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⚡ SUGGESTED ACTION

Reduce equity exposure and rotate toward defensive sectors and safe-haven assets (bonds, gold). Consider long positions in EURUSD and short positions in growth-sensitive equities until economic data stabilizes.

KEY SIGNALS

GDP growth collapse from 1.4% to 0.7% indicates severe economic decelerationInflation concerns persist despite weak growth, creating stagflation riskGeopolitical tensions (Middle East) compound economic headwindsPotential Fed policy shift toward accommodation likelyCorporate earnings downgrade cycle probable

SECTORS INVOLVED

TechnologyFinancialsConsumer DiscretionaryEnergy

Analysis generated on Mar 16, 2026 at 14:06 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 SCMP Business. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

US economic growth slumps to 0.7% in fourth quarter, stoking inflation worries

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