LPL Financial Economist Flags 0.7% Q4 GDP Revision and Fed Optionality
LPL Financial chief economist Jeffrey Roach warned that US Q4 GDP growth was revised down to 0.7% from 1.4%, signaling a notable slowdown. He projects the Fed will keep rates unchanged with optionality in its next Summary of Economic Projections, citing stagflation risks and steady inflation.
1. Q4 GDP Revision Impact
The Bureau of Economic Analysis revised fourth-quarter GDP growth to 0.7% from the initial 1.4%, marking a sharp deceleration from the 4.4% expansion in the prior quarter. LPL Financial chief economist Jeffrey Roach noted that such a slowdown underscores the need for consistent monthly growth of 0.1% to 0.2% to reassure markets that inflation pressures are contained.
2. Fed Policy Outlook from LPL
Roach expects the Federal Reserve to hold its policy rate steady at the upcoming meeting and emphasize optionality in its guidance. The updated Summary of Economic Projections is likely to forecast slightly higher inflation and lower growth, reflecting rising stagflation concerns from Middle East disruptions and mixed domestic economic indicators.