Wednesday Wisdom 2/25
Midweek reads full of fun facts to contemplate on our AI-driven economy, Texas camps, last night's spectacle, and moon bears
In Big News, AI investment and consumption are growing, while the rest of the U.S. economy contracts. The article round-up covers the new basis for tariffs, what you need to know about ICE/CBP in Texas, and the actual state of the union.
Big News
The U.S. economy is not firing on all cylinders. In the fourth quarter of 2025, real gross domestic product (GDP) expanded at a 1.4 percent annualized pace. Consumer spending and tech-related investment contributed1 a combined 3.0 percent growth to the total, while government and non-tech business investment subtracted a combined 1.8 percent from total growth.
Tech-related business investment contributed an annualized 1.4 percent to economic growth in the fourth quarter, while non-tech business investment subtracted 0.9 percent from total growth.
The divergence in commercial structure spending highlights the scale of AI infrastructure investment versus everything else. Data center investment expanded at a 17.0 percent annualized rate in the fourth quarter, while spending on all other commercial structures declined by 3.3 percent.
Meanwhile, consumer spending delivered its weakest fourth quarter performance since 2022 with a 1.6 percent contribution to total growth. Consumption is being squeezed by high prices with inflation holding above the Fed’s two-percent target over the last five years.
So what? Economic growth is not sustainable when it is tied to one sector. What concerns me most about the latest GDP numbers is the steady, five-quarter decline in non-tech business investment. Outside of AI, businesses are not expanding and, without job growth, consumer spending will struggle to grow.
Reads Around the Web
All About Section 122, Trump’s New Go-To Tariff Provision, by Shawn Donnan, Bloomberg, February 24, 2026: “Under Section 122, tariffs are capped at 15% and can only be imposed for up to 150 days. At that point, congressional approval is required to keep the duties in place… there is no evidence the US isn’t able to pay its bills or meet the obligations it has to international investors. If there were… financial markets would be selling American assets and the dollar would be collapsing amid a loss of confidence in the US economy and the most dominant reserve currency.”
Six deaths in six weeks: What to know about ICE detentions in Texas, by Lomi Kriel and Colleen Deguzman, The Texas Tribune, February 23, 2026: ”Thirty-two people died in ICE custody nationwide last year, surpassing the previous high of 20 in 2005, according to federal data. Nearly a quarter of last year’s deaths occurred in Texas… Texas is the last stop for most immigrants caught in the administration’s dragnet, with more than 18,700 people detained in the state’s ICE facilities as of February the nation’s highest share.”
Trump administration is sending pregnant migrant girls to South Texas shelter flagged as medically inadequate, by Mark Betancourt et.al., Houston Public Media, February 11, 2026: “all pregnant unaccompanied minors apprehended by immigration enforcement to a single group shelter in South Texas… more than a dozen pregnant minors have been placed… maternal health experts described a sobering list of dangers for the girls at the San Benito shelter: If one of them develops an ectopic pregnancy… miscarries or if her water breaks too early and she gets an infection, the emergency care she needs could be delayed or denied by doctors wary of the abortion ban.”
Reads on Substack
“You could not script a cleaner metaphor for American politics in 2026.”
“Their aim seems to be to get women out of the workforce.”
“We’ve become a country whose word can’t be trusted.”
Three Related Fun Facts Reads:
One Last Thing….
Sara’s Fun Facts Schedule
🦉 3/4 Wednesday Wisdom: Housing Update
☀️ 3/9 Sunshine Corner: Consumer Check-In
🦉 3/11 Wednesday Wisdom: February Employment
🦉 3/18 Wednesday Wisdom: Fed Day, afternoon edition
“The most revolutionary thing one can do is always to proclaim loudly what is happening.” — Rosa Luxemburg
Cheers! - Sara 🦉
Component contributions are a weighted share of total real GDP growth using the size ($value) and growth rate of each component. These contributions sum to total GDP growth offer a quick view of which components are adding to, or subtracting from, total growth.