Global Economy Briefing — February 21, 2026
Read about Global Economy Briefing — February 21, 2026 on The Rio Times.
Today’s global economy briefing for February 21, 2026 covers a landmark Supreme Court ruling striking down Trump’s IEEPA tariffs, a US GDP miss at just 1.4% as the government shutdown hammered growth, core PCE inflation climbing to 3.0%, and eurozone manufacturing returning to expansion territory for the first time since mid-2022. Here’s what moved markets on Friday.
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\nThe US Supreme Court struck down Trump’s IEEPA tariffs in a 6-3 ruling, finding the president exceeded his authority. Chief Justice Roberts wrote that IEEPA “contains no reference to tariffs or duties.” The decision invalidates the “Liberation Day” reciprocal tariffs and fentanyl-related duties — estimated at over $175 billion collected — but leaves Section 232 tariffs on steel, aluminium and autos intact. Trump immediately announced a new 10% global tariff under the Trade Act of 1974.
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\nUS Q4 GDP came in at just 1.4% annualised — half the 2.8% consensus — as the 43-day government shutdown hammered federal spending by 16.6%, subtracting roughly 1.15 percentage points from growth. Consumer spending held at 2.4% and business investment rose 3.8%, but exports fell 0.9%. Full-year 2025 GDP slowed to 2.2% from 2.8% in 2024. The BEA noted this report was delayed a month due to the shutdown itself.
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\nCore PCE inflation — the Fed’s preferred gauge — rose to 3.0% YoY in December, the highest since April 2024, beating the 2.9% consensus. Monthly core PCE jumped 0.4%, the sharpest increase in nearly a year. Headline PCE accelerated to 2.9% YoY. The combination of weak GDP and sticky inflation creates a stagflation-lite scenario that keeps the Fed pinned at 3.50–3.75% with no cuts expected before June at the earliest.
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| INDICATOR | ACT | EST | PREV | VERDICT |
|---|---|---|---|---|
| US GDP Q4 (QoQ ann.) | 1.4% | 2.8% | 4.4% | MISS |
| Core PCE YoY (Dec) | 3.0% | 2.9% | 2.8% | HOT |
| Core PCE MoM (Dec) | 0.4% | 0.3% | 0.2% | HOT |
| EZ Manufacturing PMI (Feb) | 50.8 | 49.9 | 49.5 | BEAT |
| DE Manufacturing PMI (Feb) | 50.7 | 49.6 | 49.1 | BEAT |
| UK Retail Sales MoM (Jan) | 1.8% | 0.2% | 0.4% | BEAT |
| US S&P Mfg PMI (Feb) | 51.2 | 52.4 | 52.4 | MISS |
| US Services PMI (Feb) | 52.3 | 53.0 | 52.7 | MISS |
| Michigan Sentiment (Feb final) | 56.6 | 57.3 | 56.4 | MISS |
| New Home Sales (Dec) | 745K | 732K | 758K | BEAT |
| Building Permits (Dec) | 1.455M | 1.448M | 1.388M | BEAT |
| UK Composite PMI (Feb) | 53.9 | 53.3 | 53.7 | BEAT |
| German PPI MoM (Jan) | −0.6% | 0.3% | −0.2% | COOL |
| India Mfg PMI (Feb) | 57.5 | — | 55.4 | BEAT |
| Atlanta Fed GDPNow (Q1) | 3.1% | 3.0% | 3.0% | INLINE |
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Europe
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Eurozone manufacturing returns to expansion, Germany leads PMI rebound, UK retail sales surge, German PPI deepens deflation
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Eurozone manufacturing crossed back into expansion territory for the first time since August 2025, with the flash PMI jumping to 50.8 in February from 49.5 — a 44-month high. The composite index rose to 51.9 from 51.3, beating the 51.5 consensus and marking the 14th consecutive month above 50. New orders returned to growth for the first time in six months, at the fastest pace in nearly four years. Services held at 51.8, narrowly missing the 51.9 forecast.
This is part of The Rio Times’ daily global economic intelligence for the Latin American financial community.
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Germany led the recovery. Its manufacturing PMI surged to 50.7 from 49.1 — the first expansion reading in over three and a half years — smashing the 49.6 consensus. The composite hit 53.1 versus 52.3 expected. HCOB attributed the improvement to increased public spending on infrastructure and defence, alongside stronger foreign demand. However, France stalled at 49.9 on the composite, with manufacturing slipping back to 49.9 from 51.2 as new orders declined again.
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UK retail sales volumes surged 1.8% MoM in January — the largest monthly rise since May 2024 — crushing the 0.2% consensus. Year-on-year growth hit 4.5%. The ONS attributed the strength to art and antiques sales hitting “unprecedented levels” alongside booming online jewellery demand, driven by gold prices above $5,000 per ounce. Core retail sales rose 2.0% MoM versus the 0.2% expected. The UK’s composite PMI came in at 53.9, beating the 53.3 consensus.
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German producer prices deepened their deflationary trajectory, falling 0.6% MoM in January against a 0.3% rise expected — the widest miss of the day in European data. Year-on-year, PPI fell 3.0% versus the −2.1% consensus. UK public sector net borrowing swung to −£30.4 billion versus the −£24.0 billion expected, suggesting a stronger fiscal position. On the equity front, the Stoxx 600 ended flat as the Supreme Court tariff ruling dominated late-session trade.
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Key Facts
— Germany’s manufacturing PMI crossing above 50 for the first time in three and a half years is the headline event for European macro. The combination of defence and infrastructure spending, a weaker euro, and the Supreme Court’s IEEPA tariff ruling removing a key uncertainty for European exporters creates a potentially powerful tailwind. The UK retail data suggests the consumer is more resilient than feared, supported by falling inflation and expected BoE cuts. German PPI deflation at −3.0% YoY confirms that the ECB faces no pipeline price pressure — reinforcing the case for holding rates steady rather than hiking further.
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United States
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GDP halved by shutdown, core PCE hits 3%, Supreme Court voids IEEPA tariffs, PMIs soften, Michigan flat
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The Q4 GDP advance estimate landed at 1.4% annualised — half the 2.8% consensus — as the 43-day government shutdown hammered federal spending by 16.6%, subtracting roughly 1.15 percentage points from the headline. The CBO estimated the shutdown shaved 1.5 points from growth. Consumer spending decelerated to 2.4% from 3.5% in Q3, while business investment rose 3.8%, buoyed by a 7.4% surge in intellectual property spending driven by AI. Exports fell 0.9% after surging 9.6% in Q3. Full-year 2025 GDP slowed to 2.2% from 2.8%.
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The separate PCE report showed core inflation accelerating to 3.0% YoY in December — the highest since April 2024 — beating the 2.9% forecast. Monthly core PCE jumped 0.4%, the sharpest since February. Headline PCE hit 2.9% YoY versus the 2.8% expected. Goods prices rose 0.4% on the month while services increased 0.3%, indicating broad-based price pressure. Personal income rose 0.3% as expected, spending rose 0.4% as expected, but the saving rate fell to 3.6% — a concerning signal for the consumer.
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The Supreme Court’s 6-3 ruling against Trump’s IEEPA tariffs was the session’s defining event. The court found IEEPA does not authorise the president to impose tariffs, invalidating the “reciprocal” Liberation Day duties and fentanyl-related tariffs. Over $175 billion has been collected under these tariffs. Trump responded by announcing a new 10% global tariff under the Trade Act of 1974, while Treasury Secretary Bessent signalled the administration would pivot to Section 232 and Section 301 authorities. Markets rallied: the S&P 500 rose 0.69% to 6,909.51, the Nasdaq gained 0.9% to 22,886.07, and the Dow added 0.47% to 49,625.97.
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Flash US PMIs softened in February. The S&P Global manufacturing PMI slipped to 51.2 from 52.4, missing the 52.4 consensus, while services fell to 52.3 from 52.7 against the 53.0 expected. Michigan consumer sentiment finalised at 56.6 versus the 57.3 expected, with one-year inflation expectations easing to 3.4% from 3.5% in the preliminary reading. New home sales came in at 745K in December, above the 732K forecast but down 1.7% from November’s revised 758K. Building permits rose 4.8% MoM to 1.455 million. The 10-year Treasury finished at 4.08% and the 2-year at 3.48%.
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Key Facts
— The GDP miss is distorted — strip out the shutdown and private domestic demand grew a respectable 2.4%. That’s the number the Fed will focus on. The real problem is the PCE report: core at 3.0% with a 0.4% monthly print closes the door on rate cuts before June and reopens the conversation about whether the next move is actually a hike. The Supreme Court tariff ruling is a game-changer for the real economy — the Tax Foundation estimates removing IEEPA tariffs shields the economy from a 0.3% GDP drag and erases $1.4 trillion in projected revenue over the next decade. But Trump’s immediate 10% global tariff response means the uncertainty is not over; it has merely shifted legal frameworks.
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Asia-Pacific
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India PMI surges, China shut for Lunar New Year, Hong Kong unemployment ticks up
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India’s manufacturing PMI surged to 57.5 in February from 55.4, signalling a sharp acceleration in factory activity. Services PMI held near-record levels at 58.4, and the composite index jumped to 59.3 from 58.4. The reading underscores India’s position as the fastest-growing major economy, with robust domestic demand offsetting external headwinds. RBI FX reserves rose to $725.73 billion from $717.06 billion, though infrastructure output growth moderated to 4.0% YoY from 4.7%.
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Mainland China was closed for the Lunar New Year holiday, leaving Asian markets lighter on liquidity. Hong Kong’s unemployment rate ticked up to 3.9% in January from 3.8%, the first increase in four months. The RBI’s Monetary Policy Committee minutes were released, with analysts parsing for signals on the timing of further rate cuts after the February easing. India’s FX reserve build continues to provide a buffer against capital outflow risks in the current tariff-sensitive environment.
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The key Asia-Pacific story was the aftershock of the Supreme Court’s IEEPA tariff ruling. Asian exporters — particularly in Japan, South Korea, and Taiwan — stand to benefit significantly from the removal of reciprocal tariffs, though Trump’s immediate announcement of a replacement 10% global tariff tempered expectations. The ruling’s impact on trade deal renegotiations across the region will be a defining theme for weeks to come. Peru’s fiscal deficit widened to 4.5% of GDP in Q4 from 4.1%, raising concerns about Latin America’s fiscal trajectory.
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Key Facts
— India’s PMI data is the regional bright spot — a 57.5 manufacturing read in a world where the US is printing 51.2 and the eurozone just crossed above 50 shows the growth differential. The real question for Asia is what the tariff landscape looks like in 30 days. The Supreme Court ruling removes IEEPA tariffs that hit Asian exporters hardest — China’s 145% rate, Japan and Korea’s reciprocal rates — but Trump’s replacement tariff and likely pivot to Section 232 investigations means the relief may be temporary. Markets will need to see the legal specifics before pricing in sustained benefit.
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Latin America & Africa
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Mexico retail sales steady, Canada retail dip, Peru fiscal deficit widens, Canadian input prices spike
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Mexico’s retail sales rose 4.3% YoY in December, just below the 4.4% prior, with MoM sales slipping 0.1% after a strong 1.0% gain in November. The data suggests the Mexican consumer remains resilient but losing momentum heading into 2026. The Supreme Court’s IEEPA tariff ruling is particularly significant for Mexico, as the fentanyl-related duties had imposed steep levies on Mexican imports. Removal of these tariffs — if not replaced — would be a material positive for the peso and Mexican exporters.
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Canadian retail sales fell 0.4% MoM in December after a strong 1.2% gain the prior month, while core retail sales rose a meagre 0.1% versus −0.1% expected. More concerning was the industrial product price index, which spiked 2.7% MoM versus the 0.2% consensus — the largest monthly jump in recent memory — driven by tariff-related cost pass-through. Raw materials prices surged 7.7% MoM versus the 0.7% expected. The BoC’s senior loan officer survey showed credit conditions tightening, with the indicator rising to 2.8 from 0.7.
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Key Facts
— The IEEPA tariff ruling reshapes the North American trade picture overnight. Canada and Mexico were the primary targets of the fentanyl-related IEEPA tariffs, and their removal — even if temporary — could provide significant relief to exporters. However, Canada’s industrial price data already shows tariff-driven cost inflation embedded in the pipeline, with the 2.7% MoM IPPI spike signalling that businesses have been absorbing costs. The question now is whether Trump’s replacement tariff framework under Section 232 will target NAFTA partners as aggressively. Peru’s widening fiscal deficit to 4.5% of GDP is a regional red flag.
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