The Profit Margin: February 23, 2026
Statistic of the Week
Local political pressures appear to be influencing the pace of new data center development. There were 25 project cancellations last year—four times the number recorded in 2024—with 21 occurring in the second half of the year. Communities located near data centers have also experienced a sharp rise in electricity costs, with some reporting increases of 267% over the past five years.
Global Perspective
It was not only the U.S. GDP report that disappointed. Japan’s economy grew at an annualized rate of just 0.2% in the final three months of 2025, well below expectations. This followed a 2.3% contraction in the third quarter, and the modest fourth-quarter growth narrowly kept the economy from slipping into recession. Meanwhile, a weak yen has continued to raise living costs in Japan’s import-dependent economy.
Market Moving Events
Tuesday: Consumer Confidence
Thursday: Jobless Claims
Friday: PPI, Construction Spending
Commentary
Domestic equity markets advanced during a volatile week on Wall Street, with all three major indices finishing in positive territory. The Nasdaq led the gains, rising 1.51%, though it remains negative on a year-to-date basis.1 The S&P 500 increased 1.07%, turning positive for the year, while the Dow Jones Industrial Average, still the year’s leader, edged higher by 0.25%.2 Fixed income yields moved modestly higher over the week, with the 10-year Treasury rising 0.04% to close at 4.09%.3
There were two significant economic releases last week, both of which disappointed investors. Fourth-quarter GDP (see chart) was weaker than expected, with the extended government shutdown cited as a primary factor.4 At the same time, inflation moved higher, creating a less-than-ideal combination. The Federal Reserve’s preferred inflation gauge, the PCE Index, showed full-year 2025 inflation at 2.9%, with prices rising 0.4% in December. Core inflation registered 3.0% year-over-year.5
The most significant development of the week was the Supreme Court’s ruling on the Trump administration’s use of IEEPA authority to impose tariffs. The Court struck down the tariffs, though the administration quickly moved to reissue them under a separate authority, initially at 10% then 15% announced over the weekend.6 Some analysts expressed concern that any disruption in tariff revenue could widen the federal deficit toward $1.85 trillion.7 Treasury Secretary Scott Bessent stated that actions taken by the administration should result in unchanged tariff revenue in 2026.8 While economic data is light for the week ahead, there are important earnings releases including many retailers and Nvidia.
Chart of the Week
The U.S. economy grew at an annualized rate of 1.4% in the fourth quarter, well below expectations of 2.5%–3.0%. The government shutdown was a significant factor, as federal spending declined 16.6%, subtracting 1.2 % from the headline GDP figure.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics, Bureau of Economic Analysis,
The Wall Street Journal
Statistic of the Week:
Kiplinger’s
Global Perspective:
The Economist
Commentary:
1. Bloomberg
2. Bloomberg
3. MarketWatch.com
4. The Wall Street Journal
5. MarketWatch.com, Bureau of Economic Analysis
6.Yahoo! Finance
7. MarketWatch.com
8. Barron’s