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America’s allies complain while quietly backing new U.S. policy.
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Matthew Lynn, Commonplace
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Tag: Economy
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Ignore the Noise. Trump’s Trade Revolution Is Working | RealClearPolitics
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Supreme Court strikes down Trump’s sweeping tariffs, upending central plank of economic agenda
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WASHINGTON — The Supreme Court struck down President Donald Trump’s far-reaching global tariffs on Friday, handing him a significant loss on an issue crucial to his economic agenda.
The decision centers on tariffs imposed under an emergency powers law, including the sweeping “reciprocal” tariffs he levied on nearly every other country.
Trump cancels tariff threat over Greenland, says NATO agreed to ‘framework’ of future Arctic deal
It’s the first major piece of Trump’s broad agenda to come squarely before the nation’s highest court, which he helped shape with the appointments of three conservative jurists in his first term.
The Republican president has been vocal about the case, calling it one of the most important in U.S. history and saying a ruling against him would be an economic body blow to the country. But legal opposition crossed the political spectrum, including libertarian and pro-business groups that are typically aligned with the GOP. Polling has found tariffs aren’t broadly popular with the public, amid wider voter concern about affordability.
The Supreme Court ruling comes despite a series of short-term wins on the court’s emergency docket that have allowed Trump to push ahead with extraordinary flexes of executive power on issues ranging from high-profile firings to major federal funding cuts.
The tariffs decision doesn’t stop Trump from imposing duties under other laws. While those have more limitations on the speed and severity of Trump’s actions, top administration officials have said they expect to keep the tariff framework in place under other authorities.
The Constitution gives Congress the power to levy tariffs. But the Trump administration argued that a 1977 law allowing the president to regulate importation during emergencies also allows him to set tariffs. Other presidents have used the law dozens of times, often to impose sanctions, but Trump was the first president to invoke it for import taxes.
Argentina and US sign a major trade deal to slash tariffs and boost a political alliance
Trump set what he called “reciprocal” tariffs on most countries in April 2025 to address trade deficits that he declared a national emergency. Those came after he imposed duties on Canada, China and Mexico, ostensibly to address a drug trafficking emergency.
A series of lawsuits followed, including a case from a dozen largely Democratic-leaning states and others from small businesses selling everything from plumbing supplies to educational toys to women’s cycling apparel.
The challengers argued the emergency powers law doesn’t even mention tariffs and Trump’s use of it fails several legal tests, including one that doomed then-President Joe Biden’s $500 billion student loan forgiveness program.
The economic impact of Trump’s tariffs has been estimated at some $3 trillion over the next decade, according to the Congressional Budget Office. The Treasury has collected more than $133 billion from the import taxes the president has imposed under the emergency powers law, federal data from December shows. Many companies, including the big-box warehouse chain Costco, have already lined up in court to demand refunds.
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Lindsay Whitehurst
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US Economy Grows at 1.4% Rate in the Fourth Quarter, Slower Than Economists Expected
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WASHINGTON (AP) — America’s gross domestic product — the nation’s output of goods and services — increased at an 1.4% annual rate in the fourth quarter, the Commerce Department reported Friday, down from 4.4% in the July-September quarter and 3.8% in the quarter before that.
A downturn in government and consumer spending contributed to the slowdown in fourth-quarter growth, the government said. Consumer spending rose just 2.2%, a significant slowdown from the third quarter’s healthy 3.5% gain.
The report underscores an odd aspect of the U.S. economy: It is growing steadily, but without creating many jobs. Growth was a fairly healthy 2.2% in 2025, yet a government report last week showed that employers added less than 200,000 jobs last year — the fewest since COVID struck in 2020.
Economists point to several possible reasons for the gap: The Trump administration’s crackdown on immigration has sharply slowed population growth, reducing the number of people available to take jobs. It’s one reason that the unemployment rate rose only slightly — to 4.3% from 4% — last year, even with the nearly non-existent hiring.
Some businesses may also be holding back on adding jobs out of uncertainty about whether artificial intelligence will enable them to produce more without finding new employees. And the cost of tariffs has reduced many companies’ profits, possibly leading them to cut back on hiring.
The economy is also unusual right now because growth is solid, inflation has slowed a bit, and unemployment is low, but surveys show that Americans are generally gloomy about the economy. In January, a measure of consumer confidence fell to its lowest level since 2014, yet consumers have kept spending, propelling growth.
Some of that spending may be disproportionately driven by upper-income consumers, in a phenomenon known as the “K-shaped” economy. Yet data from many large banks suggests lower-income consumers are still raising their spending, even if by not as much.
Copyright 2026 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Photos You Should See – Feb. 2026
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Associated Press
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DTC landlord defaults on loan amid ‘beyond bad’ local office market
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A small office complex in the Denver Tech Center has been placed into receivership following a loan default, and its owner expects the lender to take the building.
“The Colorado office market is a joke. It is beyond bad,” said Pat Melton, director of leasing for the Canadian firm Melcor.
In 2016, Melcor paid $16.85 million for The Offices at the Promenade, a 132,000-square-foot complex at 7935 and 7995 E. Prentice Ave. in Greenwood Village.
Two years later, records show, the company took out a $10.6 million loan on the property from Genworth Life Insurance Co. that it needed to pay off by the end of June 2025. But the company did not do that and still couldn’t pay when Genworth gave it three extra months.
That’s according to GLIC Real Estate Holding, a subsidiary of Genworth that was assigned the loan last month.
GLIC says Melcor owed $9 million on the loan as of Jan. 28, with interest continuing to accrue at the default rate of 9.9% annually.
In a Feb. 5 lawsuit, GLIC asked the court to appoint Trigild IVL LLC as receiver to oversee the property. Arapahoe County District Judge Joseph Riley Whitfield signed off on the request Feb. 9.
Melton, the Melcor executive, said the Denver-area office market is way worse than in Phoenix, Arizona, the other U.S. market where Melcor owns office space.
“Things are healthy in Phoenix,” he said.
In Colorado, leasing demand has “gone way down,” Melton said.
“So much vacancy, and costs are so high,” Melton said of the market. “And so many brokers with their hands out for money.”
Melton said his firm tried to make a deal with the Offices at the Promenade lender, but when it was rejected, “we basically just said, ‘Take it.’”
It may not be the only Colorado building that Melcor loses. Melton said it’s “highly likely that we’re going to be in the same position at Syracuse,” referring to the 83,000-square-foot Syracuse Hill building at 6021 S. Syracuse Way in Greenwood Village.
“I think that market’s a lost cause,” he said of the Denver office market. “We kind of gave up on it.”
Melcor also owns the office complex at 6, 8 and 10 Inverness Court East in unincorporated Arapahoe County.
Read more from our partner, BusinessDen.
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Thomas Gounley
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Inside OpenAI’s Ideological Echo Chamber | RealClearPolitics
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ChatGPT’s secular progressive moral code is serving as the framework for the world’s most powerful and influential AI systems.
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Jordan Schachtel, Substack
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Kim Jong Un vows to ‘open new service sectors’ at launch of construction project | NK News
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North Korean leader Kim Jong Un attended a groundbreaking ceremony for the fifth stage of construction in the Hwasong area of Pyongyang on Wednesday, according to state media, where he promised to open more “service sectors” to meet growing public demand.
The possible reference to economic reforms comes after Kim relaxed government restrictions on private car ownership, and as he recently promoted video games and pet ownership for the first time.
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Asian Shares Advance, Tracking a Wall St Rally Led by Nvidia
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Asian shares were higher Thursday after a rally on Wall Street that was led by computer chip giant Nvidia.
U.S. futures edged lower and oil prices rose as media reports said the likelihood was rising of conflict with Iran.
U.S. President Donald Trump has been weighing whether to take military action against Iran as his administration surges military resources to the region while holding indirect talks with Tehran over its nuclear program. That is raising concerns that any attack could spiral into a larger conflict in the Middle East.
Markets in Greater China were closed for Lunar New Year holidays, while some others reopened for trading.
In Tokyo, the Nikkei 225 added 0.8% to 57,582.93, while in South Korea, the Kospi jumped 2.8% to 5,661.22 as markets reopened following holidays earlier in the week.
Australia’s S&P/ASX 200 advanced 0.9% to 9,088.70.
Southeast Asian markets surged, with Thailand’s SET up 0.9%. India’s Sensex edged 0.1% higher.
During European trading Wednesday, London’s FTSE 100 climbed 1.2% after the latest update on U.K. inflation bolstered expectations that the Bank of England may soon cut interest rates.
On Wall Street, the S&P 500 rose 0.6% to 6,881.31 and the Dow Jones Industrial Average added 0.3%, to 49,662.66. The Nasdaq composite gained 0.8% to 22,753.63.
Nvidia helped lift the market and climbed 1.6% after Meta Platforms announced a long-term partnership where it will use millions of chips and other equipment from Nvidia for its artificial-intelligence data centers.
“No one deploys AI at Meta’s scale,” Nvidia CEO Jensen Huang said. Because his company is the most valuable on Wall Street, Nvidia’s stock was the single most powerful force pulling the S&P 500 higher.
Meta’s stock fell as much as 1.7% before recovering and rising 0.6%.
Another worry is that if AI succeeds in creating tools to do complicated tasks more cheaply, companies in industries as far flung as software, legal services and trucking logistics could see their businesses get undercut. Investors have suddenly and aggressively sold stocks of companies seen as under threat in what analysts have likened to a “shoot first-ask questions later” mentality.
Several profit reports from companies helped to lift stocks Wednesday. They continued what’s been a strong reporting season for the big U.S. companies in the S&P 500.
In the bond market, Treasury yields ticked higher following reports on the U.S. economy that came in better than economists expected. The yield on the 10-year Treasury rose to 4.08% from 4.05% late Tuesday.
One report said industrial production improved last month by more than economists expected. Another said orders for computers, fabricated metal products and other long-lasting manufactured goods also rose more in December than economists had forecast, when not including airplanes and other transportation equipment. A third report said homebuilders broke ground on more new homes in December than anticipated.
Such strong data could encourage the Federal Reserve to keep interest rates steady.
The Fed has put its cuts to interest rates on hold, but many on Wall Street expect it to resume later this year. The widespread forecast is that will come during the summer, after a new chair is scheduled to step in atop the Fed.
Lower rates can give a boost to the economy and prices for investments, but that comes at the cost of potentially worsening inflation.
In other dealings early Thursday, U.S. benchmark crude oil gained 30 cents to $65.36 per barrel. Brent crude, the international standard, was up 27 cents at $70.62.
Prices of gold and silver held steady.
The price of bitcoin fell 1.3% to about $67,000.
AP Business Writer Stan Choe contributed.
Copyright 2026 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Photos You Should See – Feb. 2026
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Associated Press
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More Price Increases Are Coming in 2026
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What do Levi Strauss, spice-maker McCormick, BMW and Porsche, Cincinnati’s Structural Systems Repair Group and 16 major drug makers have in common? They’re all hiking prices to cope with pressure from tariffs or rising health insurance costs.
The Wall Street Journal has a good rundown of what’s coming: “After holding the line on prices for several months, companies – big and small – have begun a new round of increases, in some cases by high-single-digit percentage points.”
These, of course, are on top of the tariff-driven price hikes from last year, the Journal noted.
“High-single-digit” increases is interesting. The Consumer Price Index, a key measure of inflation, is based on a basket of goods. If enough businesses adopt price increases, we could see CPI rise.
Inflation has slowed from its peak of about 9% under President Joe Biden, but it’s not gone. CPI registered an annual gain of 2.7% in December and 2.4% in January, still above the Federal Reserve’s target of 2%.
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The planned increases signal that, for many businesses, the phenomenon of suppressing prices ahead of Black Friday to avoid alienating customers appears to be done.
Who Pays Tariffs? (Sigh.)
President Donald Trump has repeatedly said that foreign countries and businesses pay the tariffs. That’s not true, and it’s never been true, as shown again by new independent data.
Last week, the Federal Reserve Bank of New York released a report showing that American consumers and businesses paid nearly 90% of the cost of Trump’s tariffs through late 2025.
The nonpartisan Tax Foundation found the tariffs cost the average American household roughly $1,000 last year. If current policies remain in place, that is expected to rise to about $1,300 per household in 2026.
Bad News for the GOP
If the mild January CPI reading was good news for Republicans at the dawn of a midterm election year, news that businesses are implementing price increases is bad news. The cost of living continues to be the main issue on voters’ minds.
As many as 7 in 10 Americans rate the country’s economic situation as fair or poor, compared to 28% who say it is excellent or good.
That doesn’t automatically translate to a Democratic romp come November. But the party has done well in special elections over the last 12 months – including in some very pro-Trump areas.
By some measures, Trump’s economy is doing pretty well – it boasts low unemployment and a soaring stock market.
But we’ve been here before. Biden helped engineer the strongest economic recovery of any rich country in the world. Voters still punished Democrats.
Why? A July 2023 poll from the Economist/YouGov did us all the favor of asking Americans what they meant when they talked about “the economy.” Stocks? Just 6% pointed to Wall Street. Jobs? Fifteen percent. The top answer, at 57%? The price of goods and services.
The political challenge for Republicans is that disinflation (a slowing of the rate of price increases across the economy) is not the same as deflation (overall prices falling). Trump promised the latter. While some things are less expensive – eggs, for instance – prices in the main are higher now than when he took office.
Across-the-board deflation is highly unlikely to happen. It’s also not desirable in an economy powered by consumption: If you expect prices to be lower next month, you may put off major purchases, which would slow growth. So how can politicians find the right tone between empathy and overpromising? This year may hold the answer.
The Week in Cartoons Feb. 16-20
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Olivier Knox
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Battle over sites near future San Jose BART station may go to trial
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SAN JOSE — A fight over sites near a BART station east of downtown San Jose might be headed to a jury trial that would pit small business owners against the Santa Clara Valley Transportation Authority.
The VTA is attempting to seize properties it says are needed to construct the 28th Street/Little Portugal BART Station near the interchange of U.S. Highway 101 and East Santa Clara Street. The site is bounded by North 28th Street, East St. James Street, North 30th Street, and Five Wounds Lane.
Properties bounded by Five Wounds Lane, North 28th Street, East St. James Street, and North 30th Street, that are the site of a future BART station east of downtown San Jose, marked by the lines. Boundaries are approximate. ( Google Maps ) A business already ousted from the BART site, Monarch Truck Center, moved in 2024 to a new location at 1015 Timothy Drive in San Jose because it was forced to swiftly decamp from its longtime spot at 195 North 30th St. at the request of VTA officials, according to Monarch Truck Center Chief Executive Officer Nicole Guetersloh.
“We were told we needed to leave so construction could start, but it has been almost two years, and nothing has happened,” Guetersloh told this news organization. “The building is still standing. They haven’t even taken down our signs. The extra time could have made a huge difference for us in terms of finding a new location.”
Monarch Truck Center headquarters at 1015 Timothy Road in east San Jose, seen in November 2024. (Google Maps) In 2021, the VTA filed a lawsuit against the owner of the site as well as Monarch and other businesses at the location as part of an eminent domain proceeding to seize control of the property so the BART station could be constructed.
The transit agency at one point even asked a Santa Clara County judge to order the businesses to vacate the site before a judgment was issued authorizing VTA to take ownership of the property.
“To meet the current construction completion schedule and ensure critical path activities are not compromised, the subject property is needed by April 2023,” Gary Griggs, the VTA’s chief program officer for the BART extension in the South Bay, stated in court papers filed in 2022. “Securing possession by this date will allow the contractor(s) to begin building demolition work and site preparation, followed by archaeological testing.”
The VTA has yet to begin any meaningful work on the site in the face of worsening delays that haunt the BART extension in the South Bay.
Following the VTA filing, it has been disclosed that massive funding shortfalls have engulfed BART’s extension to three San Jose train stops and one in Santa Clara.
For Monarch Truck Center, finding a new site and setting up shop wasn’t straightforward.
“Moving a company like Monarch Truck Center isn’t easy,” Guetersloh said. “There were very few available properties that fell within the boundaries we must adhere to. Even fewer were properly zoned and capable of supporting a full-service truck dealership like ours. Every time I drive by our old location, I can’t help but wonder what was the rush.”
The VTA’s lawsuit is now headed for a jury trial within the next few weeks, absent an out-of-court settlement of the case, court papers show.
“After VTA condemned the property, Monarch was forced to relocate to a subpar site with significant limitations,” Monarch Truck stated in a background document regarding the case. “The business has suffered a measurable loss of goodwill and is seeking just compensation. VTA has valued the company’s losses at $0, and the case is headed to trial.”
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George Avalos
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AI out of control? How a single article is sending shock waves with an apocalyptic warning
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Be afraid. Be very afraid.
That’s the message that has caught fire in the media-tech world when it comes to artificial intelligence (AI).
This column, for what it’s worth, is being written by a fallible human being on a battered keyboard with no technological assistance.
It’s extremely rare–once in a blue moon–that I read a piece that completely changes my view of an issue.
Like most people, I have viewed the rise of AI with a mixture of concern, skepticism and bemusement.
DEMOCRATS ARE LOSING AI BECAUSE OF A BIG MESSAGING PROBLEM
It’s fun to conjure up images on ChatGPT, for instance, and I get that some people use it for hyperspeed research. But then you hear anecdotes about AI screwing up math problems or spewing stuff that’s simply untrue.
Sure, we’ve all seen warnings that this fast-growing technology will cost some people their jobs, but I assumed that would be mainly in Silicon Valley. The era of plane travel didn’t wipe out passenger trains or buses, though it was curtains for the horse-and-buggy business.
But now comes Matt Shuman, who works in AI, and he’s not simply joining the prediction sweepstakes. He tells us what is happening right now.
Last year, he says, “new techniques for building these models unlocked a much faster pace of progress. And then it got even faster. And then faster again. Each new model wasn’t just better than the last… it was better by a wider margin, and the time between new model releases was shorter. I was using AI more and more, going back and forth with it less and less, watching it handle things I used to think required my expertise.”
On Feb. 5, two major companies, OpenAI and Anthropic, released new models that Shuman likens to “the moment you realize the water has been rising around you and is now at your chest.”
Rude prompts made ChatGPT more accurate. Polite ones scored lower. Tone changed the outcome. (Kurt “CyberGuy” Knutsson)
Bingo: “I am no longer needed for the actual technical work of my job. I describe what I want built in plain English, and it just … appears. Not a rough draft I need to fix. The finished thing. I tell the AI what I want, walk away from my computer for four hours, and come back to find the work done. Done well, done better than I would have done it myself, with no corrections needed. A couple of months ago, I was going back and forth with the AI, guiding it, making edits. Now I just describe the outcome and leave.”
Wait, there’s more. The new GPT model “wasn’t just executing my instructions. It was making intelligent decisions. It had something that felt, for the first time, like judgment. Like taste. The inexplicable sense of knowing what the right call is that people always said AI would never have. This model has it, or something close enough that the distinction is starting not to matter.”
This goes well beyond the geeky world of techies, in case you were feeling immune. “Law, finance, medicine, accounting, consulting, writing, design, analysis, customer service. Not in ten years. The people building these systems say one to five years. Some say less. And given what I’ve seen in just the last couple of months, I think ‘less’ is more likely.”
AI RAISES THE STAKES FOR NATIONAL SECURITY. HERE’S HOW TO GET IT RIGHT
My knee-jerk reaction is, well, I’ll be okay because no super-smart bot could talk about news on TV or podcasts with the same attitude and verve that I do. Then I remember, even as a writer, that news organizations are increasingly relying on AI.
What about musicians who bring soul to their rock ’n roll or bop to their pop? Well, the most popular AI singer is Xania Monet. Some fans were stunned to discover she wasn’t real, though created by an actual poet, Telisha “Nikki” Jones, and most listeners didn’t care. In fact, “Xania” now has a multimillion-dollar recording deal.
One other sobering thought: “Dario Amodei, who is probably the most safety-focused CEO in the AI industry, has publicly predicted that AI will eliminate 50% of entry-level white-collar jobs within one to five years.”
Gulp.
Experts predict that AI will eliminate 50% of entry-level white-collar jobs within one to five years. This statistic comes as concerns relating to job security mount around technology. (Cheng Xin/Getty Images)
This has really hit the media echo chamber, reverberating from Axios to the New York Times to the Wall Street Journal, among others.
The fact that Matt Shuman presents this in a measured tone, not a sky-is-falling shout, adds to his credibility.
Anthropic, for its part, released a study that defended its Claude Opus model, “against any attempt to autonomously exploit, manipulate, or tamper” with a company’s operations “in a way that raises the risk of future catastrophic outcomes.”
The report added: “We do not believe it has dangerous coherent goals that would raise the risk of sabotage, nor that its deception capabilities rise to the level of invalidating our evidence.”
95% OF FACULTY SAY AI MAKING STUDENTS DANGEROUSLY DEPENDENT ON TECHNOLOGY FOR LEARNING: SURVEY
Meanwhile, National Review provides a counterweight to what’s called “doomerism.”
For one thing, “most predictions anticipate that AI will be a top-down disruption rather than a bottom-up phenomenon.”
For another, writes Noah Rothman, “there is almost no room in the discourse for undesirable outcomes that fall short of catastrophism. After all, modesty and prudence do not go viral.”
And what about the positive impact?
Concerns around AI have led to the rise of “doomerism.” Though experts say that “modesty and prudence” in AI discourse “do not go viral.” (iStock)
“Rather than wiping out whole sectors, it is just as possible that the workers displaced by AI will be retained in the sectors in which they’re already employed.
It defies logic to assume that an industry that grows as rapidly as AI is predicted to will not need human data scientists, research analysts, specialized engineers, and, yes, even support and administrative staff. In addition, sectors such as health care, agriculture, and emerging industries will require as much, or even more, human talent than they currently employ.”
The conservative magazine is also annoyed that “participants in this debate default to the assumption that the only solution to AI’s disaggregating potential, whatever its scale, is big government.”
Well, take your pick.
CLICK HERE TO DOWNLOAD THE FOX NEWS APP
If AI, which can now code well enough to reproduce itself, doesn’t wipe out zillions of jobs, or society finds ways to adapt, we can all breathe a very human sigh of relief.
And if artificial intelligence is as destructive as Shuman’s alarming article says it already is, we can’t say we weren’t warned–but perhaps we can harness it to do our jobs for us while we work three days a week with three-hour lunches.
I’m agnostic at this point, except to say it’s going to be a wild ride.
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Japan’s economy barely grows in the last quarter
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TOKYO — Japan’s economy expanded at an anemic 0.2% annual pace in the last quarter, the government reported Monday, with growth for all of 2025 at just 1.1%.
Private consumption rose at a 0.4% annualized pace in October-December, but that was offset by a 1.1% drop in exports, the latest seasonally adjusted preliminary data show.
Japan’s export-reliant economy has been shaken by President Donald Trump’s tariffs, but has been growing at a lackluster pace for years. Prime Minister Sanae Takaichi is expected to roll out policies to help revive the economy after a landslide victory in a general election earlier this month.
Takaichi has promised to spend more and to suspend Japan’s sales tax on food, among other measures.
Japan’s GDP contracted 0.7% in July-September, quarter-to-quarter, after growing 0.5% in April-June. Since the economy returned to growth in the latest quarter, the country narrowly avoided a technical recession, which is two straight quarters of contraction.
On a quarterly basis, the economy grew 0.1% in October to December, the Cabinet Office reported.
The 1.1% expansion last year was the fastest since 2022, when Japan was recovering from the disruptions caused by the COVID-19 pandemic.
The government is projecting that the economy will expand at an average rate of about 0.6% in the near term.
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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama
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Stocks Settle Slightly Higher as Bond Yields Fall
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The S&P 500 Index ($SPX) (SPY) on Friday closed up +0.05%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.18%. March E-mini S&P futures (ESH26) rose +0.03%, and March E-mini Nasdaq futures (NQH26) rose +0.14%.
Stock indexes recovered from early losses on Friday and settled higher. Falling bond yields were bullish for stocks on Friday after US January consumer prices rose less than expected, which may prompt the Fed to keep cutting interest rates. The 10-year T-note yield fell to a 2.25-month low of 4.05% on the tame inflation news.
Also, a recovery in software stocks was supportive of the overall market. However, metal companies retreated on reports that the Trump administration is working to narrow its tariffs on steel and aluminum products.
Stocks initially moved lower today, with the S&P 500 and Nasdaq 100 posting 1-week lows. Worries over AI weighed on stocks and dampened market sentiment. Concerns have surfaced that the latest tools released by Google, Anthropic, and other AI startups are already good enough to disrupt many sectors of the economy, including finance, logistics, software, and trucking.
US Jan CPI rose +2.4% y/y, weaker than expectations of +2.5% y/y and the smallest pace of increase in 7 months. Jan core CPI rose +2.5% y/y, right on expectations and the smallest pace of increase in 4.75 years.
Q4 earnings season is in full swing, as more than two-thirds of the S&P 500 companies have reported earnings results. Earnings have been a positive factor for stocks, with 76% of the 371 S&P 500 companies that have reported beating expectations. According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth. Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.
The markets are discounting a 10% chance for a -25 bp rate cut at the next policy meeting on March 17-18.
Overseas stock markets settled lower on Friday. The Euro Stoxx 50 closed down by -0.43%. China’s Shanghai Composite closed down -1.26%. Japan’s Nikkei Stock 225 fell closed down -1.21%.
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Valentine’s Day Brings a Boost to a Downtown Portland Business That’s Been Around Since the 1930s. – KXL
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Gifford’s Flowers, SW PORTLAND
PORTLAND, Ore. — Portland’s downtown recovery remains uneven, according to recent economic reports, but one longtime business is hoping Valentine’s Day brings a boost.
The Portland Metro Chamber this week described the region’s economy as being at a critical turning point, citing job losses, high office vacancy and sluggish population growth. While foot traffic and safety conditions have improved in parts of the central city, many businesses say weekday activity still lags behind pre-pandemic levels.
At Gifford’s Flowers, a family-owned shop on the corner of Broadway and Jefferson, Valentine’s Day is typically one of the busiest times of the year.
“Our family has owned this for four generations,” said Laura Gifford Kerr.
The florist has operated in Portland since 1938, surviving economic downturns, changing retail trends and the disruptions of the pandemic.
Gifford Kerr said conditions downtown feel safer than they did several years ago, though she believes more weekday shoppers and office workers are needed to support small businesses consistently.
“It’s not scary to be downtown,” she said. “We’re not seeing as many property crimes that we were seeing maybe like three or four years ago.”
Valentine’s Day sales remain strong, with roses still a leading choice for customers. But Gifford Kerr said buying patterns have shifted over time.
“It used to be traditionally only roses,” she said. “We still do a lot of those, but I would say it’s almost 50-50 as far as spring, romantic mixes, local, colorful flowers.”
The shop plans to remain open through Valentine’s Day while supplies last, stocked with classic red roses and a range of bright seasonal arrangements.
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Jon Eric Smith
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CAROL ROTH: Trump is right to worry about interest rates — but there’s a price to pay
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This administration was handed a fiscal mess, and with that a difficult path. Our debt/GDP is in the neighborhood of 120%, the level of an emerging market in crisis, held together by the U.S. dollar still being a major reserve currency and trade currency, as well as the importance and relative stability of our economy and financial markets.
Our government continues to run massive deficits — the type you might see during a recession or war, not during a time of GDP expansion. And we are now in a place where interest expense on our national debt exceeds our spending on defense. As historian Niall Ferguson’s eponymous Ferguson’s Law says, “any great power that spends more on debt servicing than on defense risks ceasing to be a great power.”
Given that higher interest rates beget higher debt servicing costs, and that we have an increasing amount of debt to finance, as well as trillions of dollars in debt to refinance this year, President Donald Trump is right to be concerned about interest rates.
But there is no free lunch.
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Kevin Warsh, former governor of the U.S. Federal Reserve, during the International Monetary Fund and World Bank Spring meetings at the IMF headquarters in Washington, D.C. on Friday, April 25, 2025. (Tierney L. Cross/Bloomberg via Getty Images)
While the Fed has lowered its target interest rates, that more directly relates to interest rates at the short end of the yield curve (that is, short-dated Treasury securities). The market controls the long end of the curve (that is, longer-dated Treasury securities, like the 10-, 20- and 30-year maturities). And we have seen that those yields stay stubbornly elevated.
Ultimately, there will likely need to be some form of yield curve control (measures that bring and hold down the longer-term bond yields). If we continue to see our interest expenses rise, that will drive a larger deficit. That means more debt financing, which will drive up yields, make interest again more expensive and create a debt spiral until the U.S. and global bond markets are thrown into turmoil.
But, as we have seen with Fed meddling and government overspending, there is a cost to Fed intervention. The price paid will likely continue to inflate assets (on a nominal basis). While we need this because the value of stocks and housing decreasing over a period of time would likely directly and indirectly lead to a decrease in government receipts (aka tax revenue), it has the same effect on increasing deficits and exploding the cost of debt. This again means that some action will be taken.
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This is also why the positioning of Fed Chair appointee Kevin Warsh as a hawk (one who prefers tighter Fed policy) vs. a dove (one who prefers looser monetary policy) doesn’t really matter. Our fiscal situation and basic math will force him and the Fed to intervene in markets and lower interest rates one way or another.
The price paid for holding our fiscal house together will likely be inflation. This will continue to erode the purchasing power of the U.S. dollar and drive a bigger wedge between the wealthy and the middle class in America.
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But intervention is only a temporary solution. It buys time, but it doesn’t solve the problem.
Unless government spending is reduced, not only through lowering interest expense, but across all categories, or growth is so massive that in either scenario the deficit is eliminated, the core problem doesn’t go away. It just gets held back for a short period of time and then we will be in the same situation again.
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Our government continues to run massive deficits — the type you might see during a recession or war, not during a time of GDP expansion.
And, if you are familiar with Congress, there doesn’t seem to be any political will from either of the major political parties to spend within an actual budget.
So yes, interest rates are a problem, as is government spending. Warsh will be forced to help, whether he likes it or not, and we will all pay a price.
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