Summary

The US economy grew 2.4% in the fourth quarter of 2025 – a solid result that compensated for a partial government shutdown. However, inflation is accelerating to 2.9%, forcing the Federal Reserve to exercise caution. Investors are debating whether this growth is sufficient to support the stock market, while a geographic rotation out of US tech into European and cyclical assets is increasing.

People

Topics

  • US economic growth and inflation
  • Stock market rotation (Tech vs. Value)
  • Currency markets and safe havens
  • Private credits and risk assessment

Clarus Lead

The US economy grew 2.4% in Q4 2025 (adjusted for inventory and trade), pointing to robust consumer demand. Simultaneously, inflation jumped to 2.9% – a level that makes the Federal Reserve skeptical and works against further rate cuts. For policymakers, what matters is this: profit margins are rising to record-high 13.9%, driven by AI efficiency gains. This supports stock markets in the short term, but a growing rotation out of software stocks toward European and capital-intensive assets signals a shift in risk appetite.

Detailed Summary

The government shutdown cost the US economy approximately 1–2 percentage points of growth (December 2025–January 2026). Without this effect, quarterly growth would have been closer to 3–3.5%. However, economist Lindsay Piazza warns that optimism could be overdone: inflation at 2.9% is moving in the wrong direction, and the Fed may be forced to remain on the sidelines longer than expected.

Investment strategist Amorosa from Partners Group recommends global diversification. While the US remains attractive through innovation power, productivity gains, and fiscal stimulus (particularly tax relief), she sees opportunities in Europe – driven by German fiscal packages and new trade agreements. European manufacturing output has risen. At the same time, she warns against simply buying entire software indices: many names have run ahead of their valuation models, and "agentic AI" could be a persistent dampener on Software-as-a-Service revenue growth.

Private credits remain attractive at 9–10% yields. Default rates on sponsor-backed, secular growth loans stand at only 1–1.5% – well below index levels. This risk class offers protection in a world of declining rates elsewhere.

Key Takeaways

  • Solid US growth with difficulty: 2.4% quarterly growth despite the shutdown is stable, but not spectacular.
  • Inflation as Fed brake: 2.9% inflation rate signals that the central bank will be more hesitant about rate cuts than markets hope.
  • Global rotation underway: Investors are shifting from US tech to European and cyclical assets; Partners Group is increasing Europe allocation.
  • Profit margins at record highs: 13.9% supported by AI efficiencies – main driver of stock market stability.

Additional News

  • US Dollar retains safe-haven status: Despite weakness narratives, the dollar remains the strongest G10 currency; Swiss franc and Norwegian krone benefit from solid fiscal positions.
  • Iran tensions: US military buildup in the Middle East points to escalating confrontation; economic consequences possible via oil prices.

Critical Questions

  1. Data measurement: How reliable is 2.4% growth if the shutdown cost 1–2 percentage points? Is structural growth really only 1–1.5%?

  2. Conflicts of interest: Partners Group has substantial allocations in both markets (US and Europe). How objective is the recommendation for geographic diversification given its own capital?

  3. Inflation causality: Is fiscal policy (tax relief, government spending) driving inflation above 2.9%, or is it external shocks (energy prices, trade volumes)?

  4. Software valuation: Amorosa says some software names are now buyable but warns against index purchases. What criteria separate "attractive" from "falling knives"?

  5. Private credit risk: If default rates are below 2%, why are yields still 9–10%? Is the market pricing in hidden credit deterioration?

  6. Fed signals: Fed members discussed rate increases (according to minutes). Is the sidelines narrative a misunderstanding, and does a surprise rate hike threaten in 2026?

  7. Geopolitical risk: How much are stock valuations (2.4% growth, 13.9% margins) already adjusted for war/oil price scenarios in the Middle East?

  8. Consumer spending: Tax refunds (24% YoY) are supposed to boost consumption. Will these funds actually be spent or flow into savings – given inflation fears?

Sources

Primary Source: Bloomberg Surveillance Podcast, February 21, 2026 – Interview with Anastasia Amorosa (Partners Group), Lindsay Piazza (Economist), Jane Foley (Rabobank)

Supplementary Sources:

  1. BEA Quarterly GDP Report Q4 2025
  2. Bureau of Labor Statistics – CPI Report February 2026
  3. Federal Reserve – FOMC Minutes (latest meeting)

Verification Status: ✓ 21.02.2026

This text was created with the support of an AI model. Editorial Responsibility: clarus.news | Fact-check: 21.02.2026