ECB Official Says Chinese Imports Helped Push Eurozone Inflation Lower

A high-ranking policymaker at the European Central Bank said on February 21, 2026, that the rise in low-cost imports from China was an important factor in the fall in eurozone inflation below expectations. Lower import prices have been an important factor in the reduction in overall inflationary pressures in the region, according to ECB policymaker Fabio Panetta.

Inflation in the eurozone has fallen to about 1.7 percent in January, which is below the ECB's target of 2 percent. Panetta said that lower import prices have helped to reduce costs for businesses and consumers, leading to a slowdown in price increases. This is welcome news after a long period of high inflation in the region.

However, Panetta said that this trend does not necessarily affect the medium-term inflation outlook. He said that policymakers need to continue to monitor external factors such as exchange rate movements, global trade patterns, and supply chain developments. These factors could affect price stability in the coming months.

This is happening as the ECB is set to reassess its economic growth and inflation forecasts. Policymakers are trying to carefully weigh the impact of global import trends against risks in the energy market and the overall economy in Europe.

https://www.reuters.com/world/china/ecbs-panetta-says-chinese-imports-helped-drive-sharperthanforecast-inflation-2026-02-21/?utm_source=chatgpt.com

The jobs picture still looks muddy, even with surprisingly strong January growth

The U.S. saw the strongest monthly gain since 2025, adding 130,000 jobs in January. The unemployment rate decreased to 4.3%, the lowest level it's been in several months. This is a positive step forward but the job market overall is still weak. 

According to the Bureau of Labor Statistics, most of Januarys new jobs were in the healthcare field. This raises concerns because job growth is not spread throughout industries. Additionally,  last year's hiring was slower than first reported. Wage growth is also slowing, which could impact consumer spending because families rely on income to keep up with rising costs.

Although the economy is growing, the job market is not matching that pace. Economic growth usually comes with consistent job creation, which has not been the case. This puts the Federal Reserve in a tough spot as it decides whether to cut interest rates to support the market or keep the rates to control inflation.

Overall, January's numbers are looking promising, but it's too early to say the job market is truly stable and strong again.

https://www.cnbc.com/2026/02/11/the-jobs-picture-still-looks-muddy-even-with-surprisingly-strong-january-growth.html 

Economy U.S. trade deficit totaled $901 billion in 2025, barely budging despite Trump’s tariffs

 In 2025, the United States ran a $901.5 billion trade deficit, according to the Commerce Department. This is interesting as this amount remains almost unchanged from 2024, decreasing by just 0.2%. Trump's tariff's were implemented due to this deficit in efforts to decrease it. However, as we can see this did not go as planned as a decrease of $2.1 billion is not significant compared to the overall 900 billion number. 

It's worth noting that by October, the deficit temporarily fell to its lowest monthly level since 2009. This was contradicted as it rose again in December. Even with aggressive tariffs aimed at reducing the trade gap, the U.S. trade deficit remained almost unchanged. What do you think the U.S. could do to lower the trade deficit? 

https://www.cnbc.com/2026/02/19/us-trade-deficit-totaled-901-billion-in-2025-despite-trumps-tariffs.html

Minutes from the January meeting of the Federal Reserve revealed that they would not lower interest rates right now and want to wait and see if inflation cooperates before making any further cuts. However, there was a divergence among members in terms of future policy ideas.

Some believe it is best to hold interest rates steady until they can interpret incoming data successfully. Others believe that rates might actually increase in the near future. With the Fed already divided among ideological lines, the gap could grow if Kevin Warsh is confirmed as the next chair, replacing Jerome Powell in May. Warsh is in favor of lower interest rates, a position also supported by the president. Everyone will keep a close eye on inflation as the Fed decides what to do moving forward in 2026 and beyond.

https://www.cnbc.com/2026/02/18/fed-minutes-january-2026.html 

Tariff revenue soars more than 300% as U.S. awaits Supreme Court decision

Tariff revenue has surged this year, giving the US government a win in the revenue column. In month of  January, customs brought in about $30 billion, summing up the tariff collections for the fiscal year to $124 billion. That is more than 3 times what the government collected during the same period last year.

These tariffs, introduced last spring, have helped slow the growth of the federal budget deficit. January’s deficit was $95 billion, which is about 26% lower than a year earlier. Overall, the deficit for the fiscal year so far is down by about 17%.

However, the Supreme Court is reviewing the legal authority used to impose the tariffs, and a ruling is expected soon. If the court rules against the administration, the government could be forced to refund much of the revenue already collected, quickly wiping out recent gains.

Even with increased revenue from tariffs, long term challenges persist. Interest payments on the national debt keep climbing and are now one of the federal government’s largest costs.

https://www.cnbc.com/2026/02/11/tariff-revenue-soars-more-than-300percent-as-us-awaits-supreme-court-decision.html

The rule of law is key to capitalism − eroding it is bad news for American business

This article stood out to me, especially since I rarely use The Conversation US as a source. However, the author’s background makes the piece credible. Robert Bird, a professor of business law and ethics at the University of Connecticut, builds his argument on real world experience of how law affects business decisions, rather than focusing solely on politics or ideology.

Bird’s main point is that capitalism depends on a strict and predictable rule of law, and I found this convincing because he links legal principles directly to economic outcomes. Rather than simply arguing for more or less regulation, he highlights the need for consistency and fair enforcement. He explains that chaotic deregulation, with sudden rule changes and selective enforcement, can damage investor confidence, make long-term planning difficult, and increase business costs. This made me rethink the common belief that less regulation always leads to more growth.

I also found his use of data and global comparisons effective. Bird uses World Justice Project rankings to show that the U.S. now falls behind several other countries in rule-of-law strength. This makes his argument more concrete and shows that legal instability can harm global competitiveness. His discussion of trade agreements, property rights, and contract enforcement shows how legal uncertainty can weaken markets and discourage both domestic and foreign investment.

Another strong part of the article is its link between legal uncertainty and the job market. Bird explains that unpredictable legal and political situations are causing talented people to leave the U.S., showing that the harm goes beyond just companies and affects workers, too. The examples of more job applications abroad and growing interest in foreign citizenship show that instability in the rule of law changes where people want to. Overall, the article argues well that “smart regulation” does not block capitalism but actually helps it. Bird supports his points with business law, data, and real-world examples, showing that weakening the rule of law harms innovation, investment, and economic freedom. Even though I do not usually read this publication, the author’s expertise and clear argument made the article convincing and relevant.

https://theconversation.com/the-rule-of-law-is-key-to-capitalism-eroding-it-is-bad-news-for-american-business-254922

When Economic Metrics Stop Telling the Truth: Goodhart’s Law

When Economic Metrics Stop Telling the Truth: Goodhart’s Law

Author: Inesh Tickoo

Policymakers and firms rely on indicators to guide decisions. Goodhart’s Law identifies a

limitation of this approach, that when measures start being targets, they stop being good measures.

Let me explain that more clearly.

A speedometer tells you how fast you’re going. A speed limit changes how you drive. Once a speed

limit exists, it changes drivers’ behavior to avoid tickets, like slowing down when they see the cops.

When a statistic is used to observe the world and its reality, it behaves like a speedometer. When the

same statistic is used to judge performance or trigger rewards and punishments, it’s like a speed limit.

Inflation statistics like the Consumer Price Index (CPI) track the cost of living. When the Fed

says “we want 2.1% inflation,” businesses start setting prices and wages with that number in mind.

This statistic now affects strategy and sets expectations rather than indicating underlying conditions.

Goodhart’s Law also applies to labor markets and productivity. Firms that focus on per-hour

output or quarterly efficiency targets may boost short-term productivity through moves like cutting

training, delaying maintenance, or increasing employee workloads. Cutting training might save time

and money this quarter, but workers may turn out to be less skilled later. Delaying maintenance

will keep machines running today but they might break down tomorrow. Increasing workloads

might squeeze more output out of workers for now, but it leads to burnout, mistakes, or turnover.

While a few metrics improve, the underlying health of the firm or economy may deteriorate, leading

to weaker long-term growth. At the same time, expansions can sometimes mask fragility. Strong

headline indicators may encourage risk-taking and leverage, even if deeper structural problems are

building beneath the surface. When conditions shift, those hidden weaknesses become visible, often

abruptly.

Overall, Goodhart’s Law says it’s important to use economic indicators for diagnostics rather

than goals. Metrics and statistics are essential for understanding the economy, but overreliance on

any single measure can distort incentives and reduce the reliability of the signals policymakers and

investors depend on.

CPI rising slower than expected

 Consumer inflation showed signs of cooling to start 2026, coming in slightly lower than economists expected. According to the Bureau of Labor Statistics, the consumer price index (CPI) rose 2.4% in January compared to a year earlier. This was down from the previous month and marked the lowest annual inflation rate since May 2025, suggesting price pressures may be gradually easing.

Core inflation, which excludes food and energy, increased 2.5% annually, also meeting expectations and reaching its lowest level since 2021. Every month, overall prices rose just 0.2%, while core prices increased 0.3%. Much of the increase came from housing costs, though even housing inflation has slowed, with annual rent growth dropping to around 3%. Other major categories showed mixed trends. Food prices rose slightly, while energy prices fell 1.5% for the month. Vehicle prices remained relatively stable, and some items, such as eggs, have dropped sharply over the past year after previous spikes. These changes suggest that some of the most important household expenses are beginning to stabilize.

The lower-than-expected inflation reading has important implications for monetary policy. Investors increased expectations that the Federal Reserve may begin cutting interest rates later in 2026, with markets anticipating a possible reduction as early as June. Lower interest rates could help support borrowing, investment, and overall economic growth. However, the broader economic picture remains mixed. While GDP growth has been relatively strong, the labor market has shown signs of slowing, and inflation still remains slightly above the Fed’s long-term 2% target. This suggests the economy may be moving toward a more stable phase, but policymakers will likely remain cautious as they balance controlling inflation with supporting economic growth.

https://www.cnbc.com/2026/02/13/cpi-inflation-report-january-2026.html 

Labor Market Expectations Improve Slightly ; Short-Term Inflation Expectations Decline

 In the January 2026 survey by the Federal Reserve Bank of New York, households reported that they expect smaller price increases over the next year compared with last month. The median short-term inflation expectation—the rate consumers think prices will rise over the next 12 months—fell to 3.1%, down from 3.4% in December. Expectations for inflation over the next three and five years stayed steady at 3.0%. This shift suggests that consumers are becoming slightly more confident that inflation will cool in the near future, even if prices overall have been elevated in recent years. 

The survey also showed that people feel a bit better about the job market, with more households expecting wage growth and a lower chance of job loss in the coming year. However, expectations about household income growth were slightly lower, and many respondents reported concerns about future financial conditions and access to credit. Overall, while inflation worries eased in the short term, households still hold mixed views about their personal economic situation. 

Global Week Ahead: Markets Brace for More AI Noise and "Scare Trading"

 Global stock markets have been shaken in recent weeks by fears that rapid advances in agentic AI could disrupt a wide range of industries. Investors have been selling off stock. Particularly in Europe where software firms like Dassault Systems and RELX saw sharp declines. Wealth management companies such as St. James's Place, Aberdeen, and Quilter also experienced these declines. UBS analysts warn that AI-driven disruptions may occur beyond just software and that markets may not yet fully reflect the potential credit risks. 

However not all analysts believe the situation is dire. Dan Ives of Wedbush argues that fears of a "software Armageddon" are exaggerated. Basically suggesting that major firms like Saleforce and ServiceNow are likley to be key beneficiaries of the AI revolution. This highlights further uncertainty about which industries will be harmed or helped as AI adoption accelerates.

Attention is now shifting to focus on a major AI summit in New Delhi, where leaders from companies such as Anthropic, Microsoft, Mistral AI, and Meta are expected to announce partnerships and deals, particularly in cloud computing and AI infrastructure. With India's large tech market and deep engineering talent pool, the event could offer important signals about the next phase of global AI expansion and its impact on markets.

Global Week Ahead: Markets Brace for More AI Noise and "Scare Trading"