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• While the majority of economists expect inflation to remain stable or fall this year, one forecaster believes it could rise to 4%.
• Tariffs and other economic policies of the Trump administration have only put moderate upward pressure on inflation so far, but economist Adam Posen says the effects could simply be taking longer than expected to play out.

Inflation is probably going to cool down this year. Or is it?

A prominent economist—Adam Posen, president of the Peterson Institute for International Economics—has broken with the consensus among experts that price increases are likely to simmer down over the course of 2026, forecasting that inflation will surge to a 4% annual rate by the end of the year.

Most other economists predict it will fall to some degree from its current level of a 2.4% annual increase in January, the most recent data available.

Surprisingly high inflation would do serious damage to the economy and household budgets, as they are still adapting to the post-pandemic surge in prices.

Forecasting the economy is notoriously difficult, and Posen is an outlier. But his prediction is grounded in very real trends. If he is correct, we might see an unwelcome return of the public's least favorite economic phenomenon.

Tariffs, tax cuts, the immigration crackdown, the Federal Reserve, and human psychology could all play a role in pushing up prices faster than most experts anticipate, Posen argues.

Companies have, for the most part, raised their prices slowly in response to the new import taxes, Posen notes. That could mean the price increases will continue for longer, stoking inflation in the year ahead. Posen estimates tariffs will add 0.5 percentage points to the inflation rate by midyear.

"Historical evidence shows that tariff pass‑through tends to be gradual, with consumer prices rising only as firms revise pricing with a lag," he wrote in a blog post last month. "That pattern is playing out again: companies have now depleted the inventories they stockpiled ahead of tariff implementation. And although CEOs have been reluctant to impose a sharp, one‑time increase, they are raising prices in smaller increments over a longer period."

The picture could get even more complicated after the Supreme Court struck down Trump's tariffs on Friday. Trump imposed 15% "worldwide" tariffs over the weekend.

Tax season could provide a lift to inflation in more ways than one. Trump's signature budget legislation, the One Big, Beautiful Bill Act, lowered taxes, which will likely encourage consumer spending. It also cut the IRS budget, leading to less enforcement of existing tax laws. Both effects could lead to more spending, which tends to fuel inflation.

Trump's crackdown on immigration could also prove inflationary. Employers that typically hire many foreign-born workers, such as in agriculture and home health care, may have to raise wages to attract workers.

Then there's the human factor. The burst of high inflation after the pandemic may have permanently altered people's expectations of price increases, which economists believe can be a self-fulfilling prophecy.

"Households remember salient price increases—eggs, meat, child care, home repairs—far more vividly than aggregate statistics," Posen wrote. "These memory effects persist for years or even generations."

A common theme running through Posen's list of inflationary forces is that their effects did not hit the economy all at once, but instead are building up slowly over time. In other words, the sense of relief inspired by a few recent reports showing relatively tame inflation may be premature.

Just how lonely is Posen in his point of view?

In a Wall Street Journal survey of 72 economists in January, most predicted inflation as measured by the Consumer Price Index would decrease or stay within the 2% range by December 2026. Nine said it would tick up to an annual increase in the low 3% range. Only one independent forecaster, Amy Crews Cutts, joined Posen in calling for a significant flare-up and predicted CPI inflation would accelerate to a 5.3% annual increase.

Posen is not alone, however, in anticipating that the fallout from Trump's economic policies may take more time to play out than some experts initially thought.

Ben Harris, director of economic studies at the Brookings Institution think tank, published a blog post Thursday examining potential reasons Trump's policies, which were widely panned by economists, haven't "tanked" the economy. One major reason is that shocks like tariffs and deportations just take time to work their way through the system.

"If these shocks persist, their impact will likely be more damaging than what we observed in 2025," Harris wrote. "The U.S. economy has proven resilient thus far—only time will tell if it can continue to absorb these shocks and persist on its path of slow, but sustained expansion."

• The demise of President Donald Trump's emergency tariffs and the imposition of a fresh set of import taxes fueled fresh uncertainty about trade policy.
• Uncertainty has been blamed for slowing down the U.S. economy and discouraging businesses from hiring and expanding, contributing to a job market slowdown last year.
• Among the unresolved questions is whether Trump's new tariffs will withstand legal challenges.

The tariff chaos that rattled the U.S. economy in 2025 is back with a vengeance.

On Saturday, President Donald Trump announced a 15% worldwide tariff, replacing the 10% global tariff he had announced less than 24 hours before in the wake of the Supreme Court's decision overturning many of the import taxes Trump imposed last year using emergency powers. For economists and business leaders, the details of the new tariff were murky, but the message was clear: it's impossible to know who will have to pay tariffs, and how much, from one day to the next.

"I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries, many of which have been 'ripping' the U.S. off for decades, without retribution (until I came along!), to the fully allowed, and legally tested, 15% level," Trump posted on social media Saturday morning. "During the next short number of months, the Trump Administration will determine and issue the new and legally permissible Tariffs, which will continue our extraordinarily successful process of Making America Great Again - GREATER THAN EVER BEFORE!!!"

Trump's announcement set off speculation about what other tariffs he will impose to replace the ones the Supreme Court struck down, whether they will be higher or lower than the old ones, whether his new tariffs will end up in court, and whether the government will have to refund companies for the import taxes they already paid. It deepened a sense of uncertainty that has already had a significant impact on the economy: economists and business leaders say uncertainty is a major reason employers have curtailed hiring, making 2025 the worst year for the job market outside of a recession in more than two decades.

Uncertainty about the future tends to suppress job growth and economic activity, as it makes long-term planning difficult for any business.

"The key issue for markets is not just the tariff level itself, but the unpredictability surrounding what comes next," Daniela Hathorn, senior market analyst at Capital.com, wrote in a commentary.

Analysts blamed the fresh dose of uncertainty for Monday's slide in stock prices.

The Supreme Court ruling and Trump's initial response likely left tariffs at a lower overall level than they were before, at least for the time being. U.S. importers are now paying an effective tariff rate of 13.7% between all the various tariffs still in effect after the ruling, down from 16% before the ruling, according to an analysis by the Yale Budget Lab.

However, Trump said his administration is pursuing additional tariffs under authorities that were unaffected by the ruling. One of those other powers, Section 301 of the Trade Expansion Act, requires the administration to complete an investigation into unfair trade practices before levying a tariff. On Friday, Trade Representative Jameison Greer said the administration was launching Section 301 investigations and carrying them out on an "accelerated timeframe."

The durability of the new 15% tariff was also up in the air on Monday. Trump said the action was based on the authority given to him by Section 122 of the Trade Expansion Act, which allows the president to temporarily impose tariffs for 150 days. Whether he would attempt to extend the tariffs beyond the 150-day mark was unclear. In addition, the new trade measure could be open to legal challenges: several legal experts said Section 122 applies tariffs only to "balance of payment" deficits, not general trade deficits, and that the 15% global tariff is on shaky legal ground. Trade experts say it's not possible for the U.S. to have a balance of payment deficit since the end of the Bretton Woods system in the 1970s.

"It won’t be easy to argue that the U.S. currently has a balance of payment crisis as, by definition, the balance of payments is always in balance," Carsten Brzeski, global head of macro, and James Knightley, chief international economist at ING, wrote in a commentary.

The latest developments also brought into question trade agreements Trump signed with other countries, which imposed tariffs based on the basis the Supreme Court ruled illegal. In particular, Trump's deal with the European Union has a new cloud of uncertainty hanging over it.

"It now remains unclear whether the Parliament will push for a full renegotiation of the deal," Knightley and Brzeski wrote. "Uncertainty is back, and given the latest muscle-flexing by European leaders, the risk of escalation is now higher than it was a year ago."

In a separate social media post Monday, Trump threatened U.S. trading partners with "much higher" tariffs if they were to "play games" with trade deals in the wake of the ruling.

Rather than resolving the case, the Supreme Court's ruling and its aftermath have raised more questions than answers for anyone wondering what import taxes they'll have to pay in the coming months.

"Trade uncertainty is not fading," Bob Schwartz, senior economist at Oxford Economics, wrote in a commentary. "It is merely shifting form."

Episode 283 of the Investopedia Express podcast with Caleb Silver (Feb. 22, 2026)

Subscribe Now: Apple Podcasts / Spotify / PlayerFM

With the Supreme Court striking down the Trump Administration’s reciprocal tariffs, and the announcement of new 15% tariffs by the White House, the economic forecast has become another blizzard of uncertainty. Kyla Scanlon, author of “In This Economy?", helps us decode the sour vibes in the current economy, and the challenges facing investors. Plus, Berkshire Hathaway shareholders are bracing for an earnings report and shareholder letter that won’t be delivered by Warren Buffett for the first time in sixty years. No pressure.

• The probability of the Clarity Act being signed into law this year fell below 50% after rising above 80% last week, per a Polymarket event contract.
• Crypto leaders have recently said that a compromise between banks and the crypto industry would be reached before an informal deadline set by the White House.

Bitcoin is in legislative No Man's Land.

The passage of the Clarity Act, which creates a framework for how to treat crypto tokens and firms up jurisdictional lines of regulatory authority, is being held up by some crypto experts as a catalyst that could drive the coin market out of a rut. Excitement over that possibility, however, seems to be fading.

A Polymarket event contract asking "Clarity Act signed into law in 2026?" recently fell to around 50%, slipping from above 80% late last week. The price of bitcoin, meanwhile, is now below $65,000—the lowest levels in about a year and 50% below its October peaks. Crypto-linked stocks including Strategy (MSTR) and Coinbase Global (COIN) are similarly beaten up.

A possible near-term catalyst—a piece of crypto legislation—that might move bitcoin and the broader coin market out of its rut appears to be losing steam. That may disappoint some crypto investors who thought it could revive the bitcoin trade.

A disagreement between big banks and the crypto industry about how stablecoin holders can be rewarded must clear for the bill to move. Time, however, is running out for a compromise before an informal deadline set by the White House.

Matt Hougan, chief investment officer of Bitwise Asset Management, in an interview with Investopedia last week said the passage of the Clarity Act was the "clearest event" in the short-term that could produce a "V-shaped recovery" in crypto markets.

Bitwise in its 2026 outlook report said that the legislation would boost crypto prices, especially ether and solana, because it would provide guidance on how crypto is regulated in the U.S. and that the codification of such a framework would ensure that the regulatory posture doesn't flip with every new election. Its passage, the report said, could spark a crypto bull run that would “melt faces." (That's a good thing, in crypto terms.)

Polymarket shows coin-flip odds of the Clarity Act passing this year. Kalshi's are a bit better depending on the timeframe: The probability of passage before 2027 is around 70% on that platform; before June is at 60%, and before May is at 44%.

Stablecoins aim to stay pegged to fiat currency like the dollar. Some banks want to prohibit crypto firms from giving users rewards for holding them due to concerns about competition for savings accounts. At least one major crypto player opposed that effort and stepped away from a Senate draft last month. Following that upset, the White House set an informal March 1 deadline for a deal.

Patrick Witt, the executive director of the President's Council of Advisors for Digital Assets at the White House, said talks on Thursday took a "a big step forward," in a social media post last week. "Provided we continue to have good faith engagement from both sides on this issue, I fully expect we will meet our deadline," he said.

Brian Armstrong, chief of Coinbase, was also positive on bill movement. In an interview with CNBC last week, he said there was a "small list of remaining open items" and that "if a compromise can be found" a bill would reach President Trump's desk within months.

Treasury Secretary Scott Bessent says he is a "champion" of small banks. "We will continue to work to make sure that there is no deposit volatility associated with this," he said before a House committee earlier this month.

• Nvidia is set to report quarterly results after the closing bell Wednesday, with expectations running high for record-beating numbers.
• Options pricing suggests traders see the stock moving as much as 6% in either direction by the end of the week.

Nvidia is set to report earnings after the closing bell Wednesday, with traders anticipating a sizable move from the AI chipmaker's stock.

Options pricing suggests traders expect Nvidia (NVDA) shares could move as much as 6% in either direction by the end of the week. A move of that size from Friday’s close could push them back up to around $201, a level they haven't hit since November, or drag them down to $178. 

The stock has taken a hit in recent months, with shares down roughly 8% from their late-October record closing high as a series of splashy circular deals with other major tech players and worries about an AI bubble weighed on enthusiasm for some of the biggest names in the AI trade.

A strong showing from Nvidia could help inject some fresh enthusiasm back into parts of the AI trade that have flagged in recent months.

With many of Nvidia's Big Tech clients doubling down on AI infrastructure spending, analysts are anticipating nothing short of blockbuster results. Nvidia is seen reporting adjusted earnings per share for its fiscal fourth quarter of $1.52 on a 67% year-over-year jump in revenue to a record $65.87 billion, according to estimates collected by Visible Alpha.

However, whisper numbers could be even higher. Ahead of Wednesday's report, several Wall Street analysts indicated the chipmaker could face a particularly challenging setup this earnings season, with expectations running high for Nvidia to top consensus estimates. Short bets against the stock have also grown, according to data from S3 Partners, underscoring some skepticism about its ability to deliver.

Still, Wall Street analysts are widely bullish the chipmaker’s stock will not only return to its earlier highs, but exceed them in the next 12 months. Twelve of the 13 analysts with current ratings compiled by Visible Alpha recommend buying the stock, compared to one neutral rating. Their mean target around $253 is roughly a third above Friday's close.

• Shares of biotech Arcellx vaulted higher Monday, lifted by news that it agreed to be acquired by Gilead.
• Monday's jump, of about 80%, in Arcellx shares brought them to new highs, exceeding their late-2024 record levels.

Shares of a biotech firm are jumping on a down day for stocks.

Arcellx (ACLX) stock skyrocketed some 77% Monday after the company agreed to be bought by Gilead Sciences (GILD) for $115 per share in cash and one contingent value right of $5 per share, or $7.8 billion. Arcellx shares, which closed Friday at $64.11, recently traded around $114. They had been little changed over the past 12 months.

The timeline for drug development can be gradual, at times making the payoff for smaller-company investors a painstaking wait. M&A activity can accelerate things, bringing quick gains when a larger pharma firm acquires a smaller one.

Shares of Gilead were recently down about 1%. Read Investopedia's full coverage of today's trading here.

Arcellx and Kite, a Gilead company, were already collaborating to develop and commercialize Arcellx's anitocabtagene autoleucel, or anito-cel, a treatment for patients with multiple myeloma, a cancer that forms in white blood cells.

"This agreement reflects our conviction in the potential of anito-cel and our intention to move with speed so we can make the most of that potential for patients with multiple myeloma,” Gilead CEO Daniel O'Day said. "Beyond the potential launch this year, anito-cel could become a foundational treatment for multiple myeloma over time, including earlier lines of therapy."

The companies expect the deal to close in the second quarter.

• President Trump called out a Netflix board member by name over the weekend, suggesting it fire director Susan Rice.
• Investors took note, with shares of Netflix sliding Monday amid concerns that Trump might serve up stiff opposition to its planned merger with Warner Bros. Discovery.

The President didn't exactly weigh in on the Netflix-Warner Bros. Discovery deal over the weekend. But it looked enough like he did that he's moving markets today.

Shares of Netflix (NFLX) were recently dropping following a statement on Truth Social that said the streaming video giant "should fire" Susan Rice, a member of its board of directors who also served the past three Democratic presidents. President Donald Trump's Saturday post did not specifically mention Netflix's planned acquisition of Warner Bros. (WBD), but it responded to another person's post, which advocated against it.

Investors interested in the possibility of a Netflix-Warner Bros. Discover deal have long wondered whether it might face regulatory opposition, which could lead Warner Bros. to a tie-up with Paramount Skydance. Weekend statements from President Trump didn't end that thinking.

That seemed to inflame investor concern that the Netflix-Warner Bros. deal, its future already uncertain after negotiations with competing Warner suitor Paramount Skydance (PSKY) were reopened last week—might face challenging regulatory obstacles.

The White House did not provide an additional statement to Investopedia in time for publication, and Netflix didn't respond to a request for comment. Rice could not be reached in time for publication. An updated bid from Paramount Skydance is expected sometime today.

Shares of Netflix were recently down more than 3%, extending their year-to-date decline to nearly 20%. Warner Bros.' shares were little changed, while those of Paramount were off 2%. (Read our full coverage of today's trading here.)

Some market watchers have already begun to look past the deal—from Netflix's perspective, at least. Analysts at Wedbush last week suggested that the company will be just fine without the tie-up, citing an "entirely healthy" business.

• Novo Nordisk shares plunged Monday after the Ozempic and Wegovy maker's newest drug trial results came in short of expectations.
• Novo Nordisk's CagriSema, its next-generation weight-loss drug, led patients to lose less weight over 84 weeks than tirzepatide, the active ingredient in rival Eli Lilly's Mounjaro and Zepbound.

The weight-loss drug wars took a fresh turn on Monday.

Shares of Novo Nordisk (NVO) were down over 15% in recent trading after the Danish drugmaker announced the results of a clinical trial for its new weight-loss drug that came in short of expectations.

Novo Nordisk said that among a group of 809 people, the average weight loss for a patient taking its in-development drug CagriSema was about 23% of a patient's body weight after 84 weeks. That was lower than the 25.5% mark for those in the trial that took tirzepatide, the active ingredient in Eli Lilly's (LLY) Mounjaro and Zepbound.

The result marks the latest CagriSema trial to drag on sentiment surrounding the Ozempic and Wegovy maker's stock amid growing worries about competition from rival Eli Lilly.

Novo Nordisk and Eli Lilly's stocks have diverged over the last year as Eli Lilly's sales continued to accelerate while Novo Nordisk's have slowed. Monday's trial results could be taken as another signal that Novo Nordisk is falling behind in the weight-loss drug race.

Earlier this month, Eli Lilly said it expects another solid year of sales growth, while Novo Nordisk warned a number of factors could lead to a sales decline this year.

Separately, Eli Lilly on Monday announced a new product: a version of its injectable drug Zepbound that contains four doses of the medication in one injector pen, enough for a one-month supply.

With Monday's drop, Novo Nordisk shares hit their lowest point in nearly five years. The shares have lost more than half their value in the last 12 months. Eli Lilly shares, which rose nearly 4% Monday morning, have gained about 19% in the last year.

News of the day for Feb. 23, 2026

Stocks are pointing to a lower open amid tariff uncertainty after major indexes posted gains last week; President Donald Trump is imposing new tariffs to replace the ones the Supreme Court struck down on Friday, starting with a 15% global tariff; earnings from Nvidia, Home Depot, Lowe's, Salesforce and other major companies headline a busy week that will also include Trump's State of the Union address; Novo Nordisk shares are slumping after the Ozempic and Wegovy maker disappointed in its latest clinical trial for its next-generation weight-loss drug; and thousands of flights are being delayed or canceled across the East Coast this morning as a blizzard hits the region. Here's what you need to know today.

Stock futures are lower this morning as markets react to President Trump's latest attempts to introduce new tariffs after most of the trade levies imposed last year were struck down by the Supreme Court on Friday (more on that below). Futures tied to the Dow Jones Industrial Average and S&P 500 were each down 0.5% recently, while those linked to the tech-heavy Nasdaq dropped 0.7%. The major indexes gained on Friday, pushing each of the major indexes into positive territory for the week, as investors digested the tariff ruling and highly anticipated reports on inflation and economic growth. The Nasdaq Composite snapped a five-week losing streak following a tough stretch for tech stocks amid concerns about the sustainability of the AI boom. Gold futures were up nearly 2% at $5,175 an ounce as investors turned to the traditional safe haven amid the tariff uncertainty. Bitcoin was at $66,300, down from a weekend high around $68,500 but up from an overnight low of $64,300. The yield on the 10-year Treasury note, which affects interest rates on all sorts of consumer loans, was at 4.07% recently, down from 4.09% on Friday.

President Trump over the weekend said the U.S. would impose a 15% global tariff, up from the 10% import tax he had announced on Friday after the Supreme Court found most of the tariffs he imposed last year to be illegal. Rather than using the International Emergency Economic Powers Act to impose the tariffs, the new tariff will be imposed under Section 122 of the Trade Expansion Act, which allows the President to put tariffs in place to address trade imbalances for up to 150 days. Trump also said the White House would open investigations into several countries for potentially more tariffs through Section 301 of the same act, which allows for tariffs to be used to retaliate against unfair trade practices.

Investors could hear more from President Trump on tariffs when he gives the State of the Union speech on Tuesday night, along with views on issues such as immigration and deportations, affordable housing policies, economic growth and more. It's also a busy week of earnings reports, with tech heavyweights Nvidia (NVDA), Dell (DELL) and Salesforce (CRM), along with retailers including Home Depot (HD), TJX Companies (TJX) and Lowe’s (LOW), all set to report. Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD) are each scheduled to post results as well, with the companies in the midst of talks for Paramount to provide its best offer to sway the Warner Bros. board away from its deal with Netflix (NFLX). Conglomerate and investing giant Berkshire Hathaway (BRK.A, BRK.B) is due to release its results on Saturday, marking the firm's first earnings report since Warren Buffett's retirement at the end of last year.

Shares of Novo Nordisk (NVO) sank early Monday after the Danish drugmaker announced the results of another clinical trial for its new weight loss drug. Novo said that among a group of 809 people, the average weight loss for a patient taking its in-development drug CagriSema was about 23% of a patient's body weight after 84 weeks, lower than the 25.5% mark for those in the trial taking tirzepatide, the active ingredient in Eli Lilly's (LLY) Mounjaro and Zepbound. Results of earlier CagriSema trials had also disappointed and dragged Novo's stock lower. Novo Nordisk's U.S.-listed shares were down 14% recently, on track to hit their lowest level since mid-2021, while Eli Lilly shares gained 3%.

The snowstorm currently working its way across the East Coast is wreaking havoc on air travel, with over 5,300 flights cancelled in the U.S. already for Monday alone, per the flight tracking website FlightAware. There were more than 7,500 delays and 3,400 cancellations on Sunday as the storm started to batter the coast. Cancellation rates are near or above 90% at several airports including John F. Kennedy International, LaGuardia and Boston Logan International, among others. Shares of major airlines were lower this morning, with United Airlines (UAL) and American Airlines (AAL) each down about 1%, while Delta Air Lines (DAL) slipped 0.5%.

• Home Depot and Lowe's are set to report earnings this week, with traders expecting sizable moves in the home improvement retailers' shares. 
• Both stocks have climbed to start the year, amid a broader rotation out of tech stocks in favor of consumer-focused companies.

Home Depot and Lowe's are set to report earnings this week, with traders anticipating sizable swings in the home improvement retailers' stocks following the results.

Home Depot is set to report earnings on Tuesday morning, with rival Lowe's following Wednesday. Current options pricing suggests traders expect Home Depot (HD) stock could move up to 4% in either direction by the end of the week, while Lowe's (LOW) could swing up to 5%.

For Home Depot, a shift of that size from Friday's close could lift the stock above $398, its highest level since last September, or drag the stock down to $366. For Lowe's, the move could mean setting a record high above $294 at the high end, or dropping as low as $266.

Both stocks have enjoyed a strong start to the year so far, with Home Depot gaining about 11% and Lowe's up 16% for 2026, amid a broader rotation out of tech stocks in favor of consumer-focused companies.

Results from Home Depot and Lowe's could provide insights into the health of the American consumer, and the housing market. In recent quarters, the retailers have said many Americans are holding back on large do-it-yourself projects, and both companies are looking to professional contractors for growth.

UBS analysts recently wrote that they will be looking to comments from executives on the outlook for the home improvement market. The analysts said they see tax refunds, declining mortgage rates, and the Trump administration's proposals on housing affordability as likely tailwinds for the sector this year.

Home Depot is expected to report adjusted earnings per share of $2.53 on a 4% year-over-year drop in revenue to $38.15 billion for the fourth quarter. Meanwhile, Lowe's is projected to post adjusted EPS of $1.93 on a 10% jump in revenue to $20.37 billion.

Analysts tracked by Visible Alpha are largely bullish on both stocks, with a majority recommending buying the shares. The consensus price target of $418 for Home Depot would suggest about 9% upside, while the mean target for Lowe's at $289 would imply a roughly 3% rise from Friday's level.