US Economy Lost Some Momentum, Inflation Held Firm Ahead of War

US consumer spending barely rose in January after economic growth was weaker than previously reported at the end of last year, suggesting the economy lost some momentum before the war with Iran.

Inflation-adjusted consumer spending increased 0.1% from December, according to data out Friday, and a gauge of underlying inflation favored by the Federal Reserve rose a firm 0.4%. The government also halved its initial estimate of growth in the fourth quarter, when a record-long government shutdown, a slowdown in consumption and a decline in exports weighed on the economy.

The backdrop has shifted dramatically since then. Payrolls fell in ...