The economy of the United States recorded a modest expansion during the fourth quarter of 2022 as the Real Gross Domestic Product (GDP) was revealed to be slightly lower than anticipated. This was a result of a diminishment in consumer spending and exports when compared to earlier calculations. The Personal Consumption Expenditure (PCE) price index, however, realized a growth rate of 3.7%, which met the consensus estimates. Additionally, initial jobless claims amounted to 198,000; higher than expected.

Corporate profits, however, dropped by 2% in the fourth quarter, following slightly better results in the prior quarter of less than 0.1%. The quiet response observed by the crypto markets to the Thursday's data denoted investors were non-responsive. Digital assets have historically shown an inverse relationship between growing economic indicators with higher potential for inflation, as well as decreasing indicators as an indication of lower inflation.

The probability for a 25 basis point increase in the Federal Open Market Committee's rate for the upcoming May 3 meeting surged from 40% to 50%, per the CME FedWatch tool. The uptick in this rate and the upgraded PCE from 3.2%, which had initially been indicated in January declared the extent to which the FOMC had been on the hunt for inflation. Furthermore, the 2% contraction found in corporate profits revealed an earlier insight into the dilation of the labor market, a factor that weighed heavily on the Fed's analysis.

While crypto markets appear to be digesting the data in a silent manner, it seems that asset prices are already reflecting the market's expectations and these conflicting findings are closing in on an inflation rate equilibrium.



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