Weekly Update 2/27/2026: US Consumer Confidence Rises in February
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Domestic Economic News
US consumer confidence ticked up in February on more upbeat prospects for the economy, job market and incomes. The Conference Board’s gauge increased to 91.2, from an upwardly revised 89 last month, data out Tuesday showed. The latest figure was above all but one estimate in a Bloomberg survey of economists. A measure of expectations for the next six months climbed by the most since July to 72, while a gauge of present conditions continued to fall. The rise in confidence comes as recent data has indicated the labor market is showing some signs of stabilization and inflation has been relatively tame. However, Americans have been generally cautious about their job prospects and are still dealing with an inflation hangover from the pandemic, which stands to be a major factor in this year’s midterm elections. The survey cutoff date was Feb. 17, before the Supreme Court struck down most of President Donald Trump’s sweeping global tariffs. While Trump is still trying to keep trade deals intact, the ruling may help alleviate some of consumers’ concerns about the high cost of living going forward. “Comments about prices, inflation, and the cost of goods remained at the top of consumers’ minds,” Dana Peterson, chief economist at the Conference Board, said in a statement. “Mentions of trade and politics also increased in February,” she added. The share of consumers saying jobs were plentiful rose to a three-month high of 28%. At the same time, the share of respondents that said jobs were currently hard to get also climbed. The difference between these two — a metric closely followed by economists to gauge the job market — widened to 7.4 percentage points. Here’s what Bloomberg Economics had to say after the report: “Stronger assessments of current and expected labor-market conditions boosted consumer confidence in February. That’s an encouraging signal for spending this year.” — Eliza Winger.
US mortgage rates slipped last week to the lowest level since 2022, generating more refinancing activity. The contract rate on a 30-year mortgage dropped 8 basis points to 6.09% in the week ended Feb. 20, according to Mortgage Bankers Association data released Wednesday. The rate on five-year adjustable mortgages fell to 5.23%, also the lowest since September 2022. An index of refinancing activity climbed more than 4% to the second-highest level in five months. Refinancing has increased in all but two weeks this year, based on MBA data. However, the near quarter-point decline in mortgage rates this year has yet to inspire buyers, illustrating a housing market still struggling to gather momentum. The MBA’s measure of applications for home purchases declined 4.7% last week to the lowest level since April. At the end of 2025, new-home sales perked up, helped in part by builder incentives. The resale market also finished the year strong, offering hope the real estate market was starting to stir after years of malaise. But that’s only one part of the equation, with home prices still near record highs. Still, mortgage rates that are hovering just above 6% have the potential of attracting buyers with the approaching spring selling season. President Donald Trump last month asked Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities in an effort to drive down home financing costs. The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
Applications for US unemployment benefits rose by less than expected last week, indicating that layoffs remain relatively low. Initial claims increased by 4,000 to 212,000 in the week ended Feb. 21, according to Labor Department data released Thursday. The median forecast in a Bloomberg survey of economists called for 216,000. The period included the Presidents’ Day holiday. Continuing claims, a proxy for the number of people receiving benefits, declined to 1.83 million in the previous week. Claims data can be volatile around holidays. However, the current level of initial filings is relatively subdued, adding to other recent data that indicate some stabilization in the labor market. The February employment report, due March 6, will help policymakers gauge whether January’s strong payroll gains and dip in unemployment reflect a temporary shift or evidence of sustained improvement. The four-week moving average of new applications, a metric that helps smooth out volatility, was little changed at 220,250 last week. Before adjusting for seasonal factors, initial claims fell last week to the lowest since September, with Michigan, New York and Ohio posting the largest declines.
Prices paid to US producers rose in January by more than forecast, fueled by services and pointing to lingering inflationary pressures. The producer price index increased 0.5%, the most since September, after a revised 0.4% increase in December, a Bureau of Labor Statistics report showed Friday. An underlying gauge that excludes food and energy advanced by the most since July. Consecutive months of firm wholesale-price readings add to evidence of slow progress toward beating inflation. Higher duties on imported materials have encouraged many producers to raise prices or find other cost savings to protect margins. Economists and investors closely track the PPI because several of its components feed into the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index. Among those inputs used to compile the PCE price index, portfolio management costs, airfares and physician care costs rose firmly. The Bureau of Economic Analysis is scheduled to release January PCE price data, along with income and spending figures, on March 13. After the report, some economists bumped up their estimates of the core PCE price gauge to a 0.5% advance, which would be among the strongest in recent years. Others expect a firm, but more moderate gain. “This report validates the pivot of the FOMC away from labor market risks — we don’t see any, but some in the markets remain fixated on the slowing payroll figures — back toward price stability,” Carl Weinberg, chief economist at High Frequency Economics, said in a note. He was referring to the Federal Open Market Committee, the central bank’s rate-setting panel. The S&P 500 opened weaker and Treasury yields remained lower after the PPI data.
Interest Rate Insight and the Fed
Federal Reserve Governor Christopher Waller said his decision on whether to support an interest-rate cut at the US central bank’s next policy meeting will hinge on upcoming labor-market data. Waller said it may be appropriate to keep rates steady when the Federal Open Market Committee next meets March 17-18 if labor market data for February indicate, as in January, that downside risks to the labor market have diminished. “But if the good labor market news of January is revised away or evaporates in February, it would support my position at the FOMC’s last meeting, that a 25-basis-point reduction in the policy rate was appropriate, and that such a cut should be made at the March meeting,” he said Monday at an event in Washington with the National Association for Business Economics. “As things stand today, I rate these two possible outcomes as close to a coin flip,” he said. Waller dissented from the Fed’s decision in January to leave its benchmark policy rate unchanged, saying he preferred a quarter-point reduction because of signs of continued softness in the labor market. The government’s employment report for January subsequently came in much better than expected, as the US economy added jobs at a solid pace and the unemployment rate fell. “Assuming underlying inflation continues to signal we are close to our 2% goal, the key to setting appropriate policy will be my view of the labor market,” Waller said. Waller said he welcomed the positive figures in January, but said he has concerns they “may contain more noise than signal,” particularly because data revisions in the report also showed job creation in 2025 was close to zero. He said that suggests the job market over 2025 was “weak” and “fragile.” The Bureau of Labor Statistics is due to release its February employment report on March 6.
Waller again said that he continues to strip out the effects of President Donald Trump’s trade policies as he assesses inflation. “I estimate that what I call underlying inflation — inflation without the effects of tariffs — is close to the FOMC’s 2% goal,” he said. He said the Supreme Court’s decision on Friday to strike down a large chunk of tariffs Trump has implemented using emergency powers is unlikely to have a significant impact on his view of how the Fed should set policy. He also said he doesn’t see artificial intelligence yet having a big impact on productivity across the economy, saying recent strong trends could be due to a number of factors, including shifting work arrangements following the Covid-19 pandemic. “The growth and productivity we’ve seen over the last year or two isn’t from AI,” he said in a question-and-answer session following his remarks. “I don’t think any of us believe that that’s a big driver for productivity growth in the aggregate numbers.”
Waller, also during the Q&A session, weighed in on the Fed’s $6.6 trillion balance sheet, which he said had grown in size both because of the central bank’s asset purchases to support the economy during crises, and the Fed’s embrace of an “ample” system under which banks hold more reserves, boosting liquidity in the financial system. Kevin Warsh, Trump’s pick to be the next Fed chair, and Treasury Secretary Scott Bessent are among critics of the Fed’s balance sheet size who have called for the central bank to have a smaller footprint in markets. Waller on Monday said returning to a “scarce” reserves regime isn’t desirable. “You don’t want banks every night of the day digging around in the couch cushions, looking for money. This is massively inefficient and stupid,” he said.
Federal Reserve Bank of Chicago President Austan Goolsbee said the Supreme Court’s decision to strike down many of President Donald Trump’s sweeping global tariffs may cause more uncertainty for businesses but could also help cool inflation. “The more unpredictability you have, the more question marks that the businesses have about policy,” Goolsbee told reporters late Monday in Washington. “The dynamic of low hiring, low firing — which I believe came from business uncertainty — is made even more solidified by adding more uncertainty. That said, it could bring relief to the inflation side.” The administration is seeking new legal avenues to reimpose the duties after the court ruled Trump can’t base the tariffs on a 1977 emergency law. Goolsbee, in prepared remarks for a speech Tuesday at a National Association for Business Economics conference, said he wants to see evidence that inflation is cooling to the Fed’s 2% target before supporting further interest-rate cuts. “I remain optimistic that there can be more rate cuts this year. But that hinges on seeing actual progress on inflation that shows we are on a path back to 2%,” Goolsbee said. The Chicago Fed chief told reporters inflation progress won’t be determined by the number of months over which prices cool, but only when multiple components are moving in the direction of the Fed’s target. He added that interest rates likely aren’t slowing demand if inflation remains near 3%. Fed officials cut rates three times in the last few months of 2025 after lowering them by a full percentage point in 2024. They left rates unchanged at their January meeting and are expected to do so again in March. Economists and market participants don’t see another quarter-point rate cut at least until June, and expect the Fed to cut just twice this year. Goolsbee said that the Fed could cut “multiple” times in 2026 if price pressures abate.
A report released Friday showed underlying prices rose by a higher-than-expected 3% in the year through December. Goolsbee said the labor market and economic growth are “pretty steady” right now, speaking Tuesday in an interview on Bloomberg Television. When asked whether he thought Jerome Powell should remain at the central bank as a governor when his term as chair ends in May, Goolsbee said that while he wasn’t aware of Powell’s plans, he thinks of him highly. “I like him being around,” Goolsbee said. He also praised Kevin Warsh, whom Trump has said he plans to appoint as the next chair.
Impactful International News
German business confidence brightened more than anticipated in February, adding to hope that Europe’s largest economy is emerging from a yearslong malaise. An expectations index by the Ifo institute increased to 90.5 from a revised 89.6 in January. That’s above the median estimate of 90 in a Bloomberg survey. A measure of current conditions improved more than expected. “The German economy is showing signs of life,” Ifo President Clemens Fuest told Bloomberg Television on Monday, saying domestic demand is strong but exporters continue to struggle. “It’s really the fiscal package that is producing some stimulus here.” Germany’s economic prospects hinge on the success of vast government investments in infrastructure and defense, alongside reforms to boost competitiveness amid higher US tariffs and fiercer rivalry with Chinese manufacturers. Here is what Bloomberg Economics had to say: “Sentiment in Germany is turning more upbeat, in both manufacturing and services. However, with many sectors still struggling and industry expectations subdued, a broad-based and notable upswing is likely still some way off. We see modest growth in the first half of 2026, before surging fiscal spending delivers a larger boost in the second half.” —Martin Ademmer.
While gross domestic product rose last year for the first time since 2022, growth was a modest 0.2%. The latest trade friction, after the US Supreme Court struck down the levies imposed by Donald Trump, highlight the risks still out there. “There is now uncertainty about whether the US-EU trade deal will hold up,” Fuest said. “That is, of course, a burden on the German export industry, and this is a problem.” There have been positive signs of late, however, including the first expansion since 2022 for Germany’s manufacturing sector. The Bundesbank, meanwhile, sees GDP growing “more dynamically” from the spring. “We are seeing increasingly clear signs that the economy is picking up momentum,” said Robin Winkler, chief Germany economist at Deutsche Bank. “We stand by our forecast that the German economy is likely to grow more strongly this year than is generally expected.”
European Union officials believe the US will soon streamline its broad tariffs on products containing steel and aluminum, a topic that’s been an irritant in transatlantic relations and a key sticking point in trade negotiations. A move by President Donald Trump’s administration to reduce the amount of goods subject to the 50% tariff rate applied to so-called derivative products that contain the metals may be weeks away, according to people familiar with the bloc’s thinking. The EU has long been seeking relief from the broad metals tariff, which officials in the bloc argue runs afoul of the trade deal struck last year that put a 15% tariff ceiling on most European products. The US regularly revises the list of derivative products, increasing the amount of goods subject to the 50% rate — that list currently surpasses 400 items. “I got reassurances from our US colleagues that they know that this is a big problem for us and that they’re looking into this matter,” Maros Sefcovic, the EU’s trade chief, told lawmakers Tuesday. “Hopefully we’ll have better news in that regard rather soon.” The planned changes wouldn’t impact tariffs on commodity- grade forms of the metals. The expanding derivatives list also creates an arduous task for companies to identify the percentage of the materials in goods they export and chips away at the benefits of last year’s trade agreement. The potential progress comes at a difficult moment in transatlantic relations. Ratification of the US-EU trade deal was thrown into doubt after the US Supreme Court struck down Trump’s use of an emergency-powers law to impose his so-called reciprocal tariffs around the world. In response to the court decision, the US introduced a new 10% global levy on top of existing most-favored nation tariffs, which will increase duties on some EU exports above the level permitted in the US-EU trade accord. The European Parliament suspended legislative work on approving the EU-US accord on Monday, requesting clarity on Trump’s new trade policy. Still, both sides have indicated that they want to uphold the accord even as a transition to a new trade policy could take months. Sefcovic has been in contact with his US counterparts multiple times in recent days and he briefed the bloc’s ambassadors on the latest developments on Monday.
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