Winter Storm Fern and the potential for another government shutdown

Trend watch

Winter Storm Fern is poised to sweep across much of the continental United States – stretching from New Mexico to the Northeast – bringing heavy snow and ice. It will snarl ground and air transportation for the weekend and early next week, though the size of the area impacted is imprecise at this point.

Additionally, Winter Storm Fern could complicate the looming partial government shutdown on January 30^th. The House has passed the final four of 12 annual appropriations bills, but the Senate still must approve them—plus two others. However, the Senate won’t return until next week, meaning the winter storm could further delay action closer to the January 30^th funding deadline.

Meanwhile, freight volumes at the two busiest U.S. ports – Los Angeles and Long Beach – increased 1.6% in December and rose 0.9% for full year 2025 compared to 2024. The sister west coast ports, which primarily originate in Asia, including China, set a record handling 20.1 million containers, topping 2021’s post-COVID surge by 0.3%.   

Our take

We’re happy to report that all the economic indicators on Econ-at-a-Glance impacted by the federal government shutdown have now reported through November. Still, too many of the government-sourced indicators are at least a month in arrears. That’s not a complaint directed at the responsible agencies – who’ve been scrambling to get current on the data – but rather a recognition that the data backlog continues.

Again, this is why we’ve been saying that we probably won’t see a clean view on the economy until mid-February, although it’s increasingly likely that might extend into early March. We’re also hopeful that the looming partial government shutdown is avoided, which could potentially delay data further.

Nonetheless, we’ve generally been encouraged by the resilience in most of the incoming economic data. We’d highlight the personal income and spending, which are growing at a healthy clip despite the government shutdown. Moreover, on an inflation-adjusted basis (aka real), both continue to climb (slide 9, available to clients on the full report).

Additionally, the consumer spending component within gross domestic product (slide 8, available on the full report) increased at a robust 3.5% pace during the third quarter – more than a full percentage point above the pre-pandemic trend of 2.4% – and was the largest contributor to growth. Indeed, the third quarter is well back in our rearview mirror but illustrates that the economy is likely doing a bit better than consumers say they “feel” based on consumer sentiment surveys. 

Bottom line

The U.S. economy remains resilient, but the data is still muddied by the government shutdown, which has created distortions and delays. We likely won’t get a clear read on the economy until sometime in mid‑February. Nonetheless, we expect an uptick in U.S. growth to 2.3% in 2026 thanks to four primary drivers – tax incentives for consumers and businesses, marginally lower borrowing costs thanks to Fed easing, steadier trade policy and tariffs, and continued investment in AI and technology spending.