The fourth quarter of 2020 brought mixed news for the U.S. economy. The Federal Reserve’s new key inflation rate increased, but the S&P 500 still rallied.

Data released by the Fed showed that the key inflation rate rose to 1.6% in the fourth quarter, up from 1.4% the previous quarter. This was the highest rate since 2018 and suggests that the U.S. economy is on the road to recovery.

However, consumer spending declined slightly in December, falling 0.2%. This was accompanied by a decrease in key inflation measures, which cooled in December according to the New York Times.

Despite this, the 10-year Treasury yield rose to 3.52%, suggesting that investors are still optimistic about the U.S. economy.

Overall, the data suggests that the U.S. economy is on the right track, but there are still some areas of concern. Investors will be closely watching the key inflation rate and consumer spending figures in the coming months to get a better understanding of the current economic climate.