ECONOMIC OUTLOOK
Elliot Eisenberg, Ph.D. is an internationally acclaimed economist and public speaker specializing in making economics fun, relevant and educational. Dr. Eisenberg earned a B.A. in economics with first class honors from McGill University in Montreal, as well as a Master and Ph.D. in public administration from Syracuse University. Eisenberg is the Chief Economist for GraphsandLaughs, LLC, a Miami-based economic consultancy that serves a variety of clients across the United States. He writes a syndicated column and authors a daily 70-word commentary on the economy that is available at www.econ70.com.
AI Activity
AI is simultaneously creating pricing power and eroding it. In addition to the uncertainty surrounding future cash flows to the hyperscalers, LLMs are extending Big Tech’s dominance by automating and compressing margins for software as service providers (think Adobe, Salesforce...). But at the same time, hyperscaler AI demand is pushing up value where there are hard physical constraints and supply-chain bottlenecks including memory, energy infrastraucture, energy storage, chips and more.
Waxing Wealth
Household equity holdings are now equal to 3x disposable income. This compares to 2x in 2019, and on par with disposable income as recently as 2009, during the Housing Bust. As a result of this massive rise in wealth, a 10% equity return including dividends after taxation at top rates is worth as much as an 18% rise in income. Despite lousy wage/income growth, the economy keeps growing, for now.
Positive Presidents
This year marks the 147th annual Presidents Day, as Congress officially made Washington’s Birthday a federal holiday in 1879. With passage of the Uniform Monday Holiday Act in 1971, the holiday was moved to Monday. The most popular president is Abe Lincoln with a positive rating of +71%, followed by John Kennedy at +61%, George Washington at +60%, Teddy Roosevelt at +51%, Thomas Jefferson at +46%, and FDR at 44%.
Valentine Value
For the decade ending Valentine’s Day 2026, the cost of a box of chocolates rose a stunning 218%. The cost of a dinner for two rose less but was still up 160%. A bottle of champagne increased 127%, while a dozen roses jumped 66%. Fifth in the Valentine’s Day inflation sweepstakes is a pair of diamond earrings, they’re up 36%, and finally a greeting card, up 31%.
Productivity Problem
While AI may lead to sizable increases in labor productivity, that’s no reason to lower rates as Kevin Warsh suggests. Productivity gains may not materialize, moreover the massive investment in AI/LLMs is pushing up prices for energy, chips, electrical equipment, plumbers, electricians, and so on. Therefore, you probably see lower production costs from increased investment, and thus faster growth, but concomitant inflationary pressure. To prevent it, rate hikes are likely.
January Jobs
January net employment grew by a strong 130,000 jobs. Additionally, the workweek rose 0.3%, and the unemployment rate fell to 4.3% from 4.4% despite the labor force participation rate rising to 62.5% from 62.4%. Moreover, part-time employment fell by 453,000, and quits rose by 197,000. The only problem, healthcare/social assistance was responsible for 123,500, or 95% of all jobs. Outside of healthcare/social assistance, job growth has been zero since 12/24.
Sour Sentiment
The preliminary February University of Michigan consumer sentiment survey rose to 57.3, a six-month high, but curb your enthusiasm. The long-run index average is 84.7, and 57.3 is at or below the levels that defined every recession dating back to 1953; twice there was no recession. As for the K-economy, the top third of income earners saw their sentiment rise to 66.5, the bottom third fell to 48.9.
Walmart Win
Walmart has become the 10th US firm, and just the second non-tech firm after Berkshire Hathaway, to hit the $1 trillion mark. Founded by Sam Walton with one store in 1962, it now has almost 11,000 stores worldwide, revenue will top $700bn this year. Nvidia tops the list at $4.5tn, followed by Apple ($4.1tn), Alphabet $4.0tn), Microsoft ($3.1tn), Amazon ($2.5tn), Meta ($1.7tn), Tesla ($1.53tn), Broadcom ($1.46tn), Berkshire Hathaway ($1.1tn).
