The Economy Is Slowing — But Not Breaking

This week’s data reinforced a theme that has been building for months: the U.S. economy is cooling gradually.

Fourth-quarter GDP came in at 1.4%, lower than expected. However, underlying private demand remains stable. Inflation, measured by the Fed’s preferred PCE index, rose modestly but did not accelerate beyond expectations.

That’s important.

Markets prefer slow, steady moderation over sudden deterioration. Mortgage rates respond to trends — not one isolated report.

At the same time, housing fundamentals remain steady. Inventory is tight, foreclosure activity remains low, and new home sales have held up better than headlines suggest.

The bond market has settled into a range. The 10-year Treasury is hovering near 4.10%, acting as a pivot point. Without a major surprise in inflation or labor data, rates are likely to remain stable near current levels.

This is not a market driven by fear or frenzy.

It’s one driven by patience.

Preparation remains the winning strategy.