The economy caught a chill from Winter Storm Fern and tariffs are a lingering problem, S&P finds
Economy has gotten off to a slow start in 2026
Published: Feb. 20, 2026 at 11:07 a.m. ET
The U.S. economy was hampered early in the new year by extreme winter weather.Photo: Getty Images
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The U.S. economy got sidetracked in February by tariff-related price increases, sluggish sales and the previous month’s Winter Storm Fern, but top executives were also more optimistic that business will improve later in the year.
A survey of service-oriented companies that employ most Americans slipped in February to 52.3, a 10-month low, S&P Global said Friday.
A survey of manufacturing executives also dipped to a seven-month low of 51.2.
Any number above 50 signals the economy is expanding, but the soft readings in February suggest the new year has gotten off to a slow start.
The S&P surveys for January and February “are indicative of gross domestic product rising at an annualized rate of just 1.5%, signaling a marked cooling of the economy in the first quarter,” said Chris Williamson, chief business economist at S&P Global.
GDP grew 2.2% in 2025.
Businesses are increasingly optimistic about the rest of the year, however.
“Business expectations for the year ahead jumped to the highest for just over a year, adding to signs that at least part of February’s slowdown may prove temporary,” Williamson said.
Companies were hoping better weather would boost sales after extremely cold and snowy conditions in late January and early February.
What’s more, lower interest rates and new tax cuts were expected to lend a helping hand.
The biggest worry? The lingering effect of tariffs and political uncertainty.
President Donald Trump’s tariffs, for example, were struck down by the Supreme Court on Friday, but the White House could try to reimpose them through other means.
The S&P surveys are the first indicators each month of how the economy is faring.
Market reaction: The Dow Jones Industrial Average
and the S&P 500
rose in Friday trading after the Supreme Court’s tariff ruling.
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About the Author
Jeffry Bartash is a reporter for MarketWatch in Washington.
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