The economy was flashing stagflation signals — tepid growth and high inflation — even before the Iran conflict added an oil shock to the mix.

Why it matters: What happens when geopolitical turmoil clogs up the world's oil supply chain, against a backdrop of a U.S. economy losing momentum amid sticky inflation?

• We're about to find out.

Driving the news: A revision to fourth-quarter GDP shows the economy grew at only a 0.7% annualized rate in the final months of 2025, half as much as the 1.4% growth rate originally estimated.

• Real final sales to private domestic purchasers, an underlying measure of growth that sums up consumer spending and private investment, rose at a 1.9% annual rate in the fourth quarter — a downward revision of 0.5 percentage point.

By the numbers: Also this morning, the Commerce Department released the Federal Reserve's go-to inflation gauge for January.

• The core Personal Consumption Expenditures Price Index, which excludes food and energy costs, rose 3.1% in January compared with a year ago. It has marched higher since reaching 2.7% in October.
• Core PCE rose at a 3.7% annualized pace over the last three months. That is about the same pace as December, but close to double the 2% inflation rate targeted by the Fed.

Reality check: This was broadly as expected. What's worrying is that it shows elevated inflation even in advance of the oil shock triggered by the Iran war.

What they're saying: "The inflation trajectory will only steepen in the coming months," Nationwide chief economist Kathy Bostjancic wrote in a note, citing how gasoline, diesel and fertilizer prices have surged in the wake of the Iran war.

• "We now see a steep rise in inflation and weaker economic activity in Q2 due to the spike in gasoline and energy prices, weaker exports as the rest of the world reels from the disruptions, and an erosion in business confidence," Bostjancic added.

State of play: Today's data showed that consumer spending was barely budging prior to the war's hit to consumer wallets.

• Real personal consumer expenditures rose 0.1% in January, the same pace as December.
• The saving rate surged by half a percentage point, to 4.5%, in the first month of the year, a sign that cautious consumers are socking away a larger share of their income rather than spending it. That's a reversal from much of 2025, when the personal saving rate was declining.

Between the lines: The situation leaves the Federal Reserve in an impossible position. President Trump is already angling for imminent interest rate cuts, and his Fed chair nominee, Kevin Warsh, indicates that he wants to deliver them.

• But that risks worsening price pressures that are already high and rising. Holding rates steady (or raising them) could further choke off growth.

What to watch: AI-related investment is the obvious saving grace for the economy as technology giants commit trillions of dollars to the boom. But that trend was all but absent in the fourth quarter of 2025, a warning about how fragile growth is without it.

It isn't all doom and gloom on this Friday morning. New details point to a firming job market to start 2026.

Driving the news: The number of job openings jumped by 396,000 in January, the Labor Department said, mostly reversing a steep decline in the final two months of 2025. The job openings rate jumped to 4.2%, from 4% in December.

• The report showed stable hiring and quit rates, indicating no big changes in either companies' willingness to bring on new workers or workers' willingness to leave a job voluntarily.
• The rate of involuntary separations — layoffs and discharges — actually edged down by 35,000, as the low-fire job market equilibrium remained firm.

Yes, but: The government's monthly jobs report also pointed to solid January results, before turning more negative in February.

• It is worth watching whether the Job Openings and Labor Turnover Survey data, which gives a more granular glimpse into how the labor market is changing, shows the same pattern.

What they're saying: The uptick in job openings "represents a small chance to exhale for a market that otherwise continues to hold its breath in the face of ongoing volatility and uncertainty," Indeed Hiring Lab's Laura Ullrich said in a note.