Hey friends - I don’t want to throw any shade at Punxsutawney Phil, but I feel like spring is in the air. 新年快乐!

🌎 The Big Picture

Short weeks are always packed. The economy showed some warning signs, but still steady trends. Here are the highlights:

▶️ America’s biggest companies are making a lot of money.

Companies in the S&P 500 index reported 13.2% more profit last quarter than the year before, marking the fifth straight quarter of double-digit growth, according to FactSet. Nearly three-quarters of companies earned more profit than investors expected.

Companies didn’t just cut costs to boost earnings. Customers bought more. Tech companies brought in billions more in revenue, and healthcare firms saw massive jumps in spending. Corporations reported 9% higher sales in the fourth quarter than the year earlier, the fastest revenue growth in three years.

Businesses keep getting more efficient, too. Profit margins reached 13.2%, the highest level since FactSet began tracking in 2009. When companies make more money on each sale, they can invest in hiring, raise wages, and reward shareholders through dividends or stock buybacks. Corporate profit growth powers stock prices, so these profit trends can be good news for investors and retirement savers.

▶️ Tariffs have raised prices for Americans as companies scrambled to find new suppliers.

The US increased average taxes on imports from 2.6% to 13% throughout 2025 to protect American industries by making foreign goods more expensive. Sometimes, foreign companies may lower their prices to keep their products competitive in the US, but that didn’t happen much. According to an analysis by the New York Federal Reserve, nearly 90% of the increased tariff costs landed on US companies and shoppers instead, as US importers paid the taxes and often passed those costs on to their customers through higher prices.

The tariffs did help steer American companies to buy less from China. China’s share of US imports dropped from 15% to below 10% in just one year, the sharpest decline since tariffs first went up in 2018. By November, foreign exporters started cutting prices slightly to keep business, but Americans still paid 86% of the tariff burden. The higher import prices forced companies to reorganize supply chains and drove up costs across the board. Businesses may face more uncertainty with their costs as legal challenges to the new tariffs reach the Supreme Court.

▶️ The government is likely to borrow more in the next decade than it did in the past 240 years, risking health and retirement benefits.

The Congressional Budget Office’s latest forecast shows that the government will run a $1.9 trillion deficit this year, climbing to $3.1 trillion by 2036, as Washington continues to spend far more than it earns in taxes every year. According to the non-partisan office, the federal government’s net debt (the total amount it owes to individuals, businesses, and foreign governments) is on track to reach 120% of the nation’s annual economic output within 12 years, the largest share ever.

Tariffs are helping bring in more income, but immigration and spending policies are burning cash while borrowing costs climb. Congress’s 2025 spending bill and tax cuts increased deficits by an estimated $4.7 trillion, while new import taxes reduced deficits by about $3.0 trillion. Interest payments alone will double over the decade, exceeding $2 trillion annually by 2036.

Social Security, Medicare, and Medicaid face mounting budget problems as baby boomers retire and drain existing reserves, potentially forcing lawmakers to cut benefits or raise taxes. As borrowing costs stay high and the population ages, Americans may need to plan for less reliable retirement and healthcare support.

So, there’s a good amount of stuff that’s prioritizing short-term at the expense of the long-term. What could go wrong?

🏭 The Companies Everyone’s Talking About

❔ The Big Question of the Week

Scoops app users: We have taken the beta app offline for a short period for some major updates. Can’t wait to show you all what we’ve been working on! Reach out if you have any questions.

We’re going to switch up the content in this spotlight for a bit to make sure you all have the info you need to master your week.