Chief Economist at Stifel, Lindsey Piegza, Talks Latest Economic Data, Fed's Path Ahead

Summary

Bloomberg Talks – Episode Summary

Episode: Chief Economist at Stifel, Lindsey Piegza, Talks Latest Economic Data, Fed's Path Ahead
Date: February 20, 2026
Host(s): Paul (Unnamed host/interviewer), Bloomberg team
Guest: Lindsey Piegza, Chief Economist at Stifel

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Overview

This episode features an in-depth interview with Lindsey Piegza, Chief Economist at Stifel, exploring the latest US economic data, the implications of recent government shutdowns, and the Federal Reserve's trajectory amid persistent inflation. The conversation covers real GDP trends, the shape of the ongoing economic recovery, legislative impacts, and how the Fed is digesting mixed signals from the labor market and inflation reports. Piegza provides clear explanations and challenges some prevailing media narratives, offering sober forecasts for growth, consumer spending, and monetary policy.

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Key Discussion Points & Insights

Parsing the Latest GDP and Shutdown Data

• Shutdown's Economic Impact:

  • The US economy experienced a significant shutdown for nearly half of the last three months. There’s debate on how much this slowed growth (White House says 2 percentage points; BEA says 1%).
  • Piegza’s Take:

    "...we know that there, there was a significant damping down effect regardless of whether it's 1 or 2 percentage points." (01:53)

• Finding the True Momentum:

  • Piegza urges focus on real final sales to domestic purchasers (which rose 2.4%), stripping out volatile components like trade and inventories for a clearer economic reading.

    "Let's look at real final sales to domestic purchasers which rose at 2.4%. And this is more in line with what we saw in the third quarter at 2.9%." (01:53)

  • Host Paul concurs:

    "And the bottom line, Paul, is that's a pretty good number." (02:36)

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Sticky Inflation and the Fed’s Dilemma

• Persistent Inflation:

  • Inflation recently ticked up to 2.9%, countering expectations for cooling price increases.
  • Piegza voices concern about the lack of progress toward the Fed’s 2% target, predicting inflation will remain near 3% for some time.

    "We don't see this ongoing improvement of disinflation that the Fed remains very optimistic that we're going to achieve... I do expect inflation to remain elevated nearer that 3% pace for some time..." (02:57)

• Fed's Response and Market Signaling:

  • Despite moderate economic growth, recent strong payrolls and inflation data have solidified the Fed’s "on the sidelines" stance—no further immediate rate cuts expected.

    "...the pickup as we saw this morning in inflation is going to really solidify... their position on the sidelines... maintaining this 3ish percent isn't going to move the needle, but they are sending the signal to the marketplace that they're focused on inflation..." (03:57)

  • Some Fed members have discussed renewed rate hikes, but Piegza does not think they will act soon.

    "As we saw in the minutes yesterday, there were some members that were... willing to consider a rate hike scenario. I don't think we're there quite yet." (03:57)

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What Shape Is the Recovery: K, E, or Other?

• Beyond the K-Shaped Narrative:
  • Host suggests a K-shaped recovery, with growing divides between economic winners and losers.
  • Piegza reframes the discussion, calling it more of an "E-shaped" recovery—underscoring uneven benefits, but not a simple split:

    "I would argue it's not necessarily a K shaped but more of an E shaped recovery. It's going to be uneven...particularly as we see household net worth significantly increase for those at the upper end... a benefit which the middle class and the lower end... has not benefited from." (05:10)

  • Legislation such as the "one big beautiful bill" helps maintain spending levels but won’t spark major new growth.

    "...this won't necessarily provide a windfall to spending, but it will help to maintain the current levels of expenditures across those different rungs in the E shaped recovery." (05:10)

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Fiscal Policy and Growth Outlook

• Legislative Impact on GDP:

  • Piegza estimates new legislation could boost 2026 growth by “several tenths of a percentage point,” a modest but positive effect.

    "...the overall impact on the economy for 2026 to be upwards of several 10 of a percentage point. That doesn't seem like a lot. But... any additional boost to consumers or businesses is a welcome step in the right direction." (06:18)

• Threats to Consumption:

  • Persistent high prices continue to erode consumer spending power, with a risk of dampening broader economic growth:

    "The biggest factor is going to be how much of a dampening effect does that overhang of elevated prices take out of consumers ability to spend out in the marketplace." (06:18)

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Reclaiming Growth after the Shutdown

• Short-run GDP Dynamics:
  • While shutdowns depress GDP in their quarter, the economy typically rebounds swiftly as activity resumes.
  • Piegza expects lost ground from late 2025 to be made up in early 2026, though the most recent shutdown was less severe.

    "...whatever we lost at the end of the year, we typically regain when the government reopens... we’re likely going to see an even stronger 1% boost across the first quarter." (07:09) "Anything that was lost at the end of the year to be reclaimed at least within the first half of 2026." (07:09)

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Notable Quotes & Memorable Moments

• On core economic momentum:

  "Let's strip out inventories, let's strip out trade, let's look at real final sales to domestic purchasers which rose at 2.4%."
  — Lindsey Piegza (01:53)

• On persistent inflation:

  "I do expect inflation to remain elevated nearer that 3% pace for some time, which will keep pressure on the Fed to remain on the sidelines."
  — Lindsey Piegza (02:57)

• On the Fed’s approach to risk:

  "This is a Fed that has been willing to tolerate above target inflation for years. So simply maintaining this 3ish percent isn't going to move the needle."
  — Lindsey Piegza (03:57)

• On “E-shaped” recovery:

  "It's going to be uneven. Certainly there is this dichotomy across classes... not necessarily a K shaped. Where some are particularly perpetually... doing better and others are losing momentum."
  — Lindsey Piegza (05:10)

• On fiscal stimulus:

  "...any additional boost to consumers or businesses is a welcome step in the right direction."
  — Lindsey Piegza (06:18)

• On the shutdown effect:

  "Whatever we lost at the end of the year, we typically regain when the government reopens... I would expect that to be reclaimed at least within the first half of 2026."
  — Lindsey Piegza (07:09)

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Timestamps for Important Segments

• Parsing the latest GDP data & shutdown impact: 01:15–02:36
• Inflation and Fed outlook: 02:47–03:57
• Recovery shape: E vs. K: 05:10–06:05
• Legislation and GDP forecast: 06:05–06:49
• Government shutdown effect and rebound: 06:49–07:54

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Tone & Style

The episode strikes a balance between analytical rigor and accessibility. Piegza uses plain language to explain technical economic concepts and is direct about the uncertainties and trade-offs policymakers face. The hosts maintain a conversational, slightly irreverent tone, adding memorable moments like "queen of ish in economics" and "Dr. Pizza" for levity.

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Conclusion

Listeners gain a clear, nuanced understanding of the current US economic outlook: moderate growth, stubborn (but not spiraling) inflation, a Federal Reserve likely to pause, and a recovery marked by inequality across income groups. Fiscal stimulus helps but is not a panacea, and the economy’s resilience will depend on how long consumers can withstand elevated prices. Lindsey Piegza’s insights help separate headline noise from core economic trends, offering informed guidance for policy watchers, investors, and the broader public.

Transcript

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[Paul]

Alexis mentioned the math. I want to go over it and Lindsey's going to tell me what to do here. Lindsey Pigs a this was Stifel nominal GDP last time around ending September 30th was a China like 8.3%. Paul, if you add in the 1% government shutdown, we go from 5.1% published nominal to 6.1 ish. I'm going to say there as well. Joining us, the queen of ish in economics, Lindsay Pigs, joining us. What do you do with these numbers, Lindsey? How do you format the view forward given the plethora of data in the last 10 minutes?

[Lindsay Piegza]

Well, I think when we dig through some of the details, we're going to see that it's pretty messy, particularly given that the economy shut down for almost half of that three month period. Now the president says it shaved off about two points. The BEA says it shaved off about 1%. So we know that there, there was a significant damping down effect regardless of whether it's 1 or 2 percentage points. So parsing through some of the details, I think the more important figure to focus on right now to really gauge the underlying momentum of the economy is let's strip out inventories, let's strip out trade, let's look at real final sales to domestic purchasers which rose at 2.4%. And this is more in line with what we saw in the third quarter at 2.9%.

[Paul]

Oh, that's like, that's brilliant. And I really, really buy this angle from years ago at Fidelity with Bettina Dalton. And the bottom line, Paul, is that's a pretty good number.

[Unnamed Host/Interviewer]

I think it's a pretty good number. And how about the inflation outlook there, Lindsey? If you're given that the economy is growing at a solid rate, what's the inflation story on top of that?

[Lindsay Piegza]

Well, as you know, I have been long concerned about inflation and the Fed's lack of focus on inflation. So we see this pick up to 2.9percent and that is in the wrong direction. We don't see this ongoing improvement of disinflation that the Fed remains very optimistic that we're going to achieve, getting back to 2% as they forecast by 2028. Now any improvement, of course is welcome, but I do expect inflation to remain elevated nearer that 3% pace for some time, which will keep pressure on the Fed to remain on the sidelines.

[Paul]

She so undersells it. I mean she was my economist of the year one year, two years, three years ago, I can't remember, Lindsey with Jim Bianco was out front with Mohamed El Erian. You know what folks? Inflation is going to be resilient. She nailed it.

[Unnamed Host/Interviewer]

So Lindsey, talk to us about kind of how you think the Fed is digesting the numbers we had today. Some of the labor data we had last week, the CPI data we had last week. How are they putting it all together, do you think?

[Lindsay Piegza]

Well, I think right now the Fed is looking at this moderate trend line in activity as a justification for their earlier decision to cut rates. Remember over the past two years, we're now 175 basis points closer or arguably at now that neutral level. But the reacceleration in payrolls in the latest report, the pickup as we saw this morning in inflation is going to really solidify. Now their position on the sidelines. As we saw in the minutes yesterday, there were some members that were considering that were willing to consider a rate hike scenario. I don't think we're there quite yet. This is a Fed that has been willing to tolerate above target inflation for years. So simply maintaining this 3ish percent isn't going to move the needle, but they are sending the signal to the marketplace that they're focused on inflation and that should help rein in market, excuse me, inflation expectations.

[Paul]

When you have a PhD in economics, you can say ish with quality, Lindsey. I mean the bottom, the bottom line here is it's a K shaped economy. We're going to get all sorts of mail. You guys are nuts. You have no idea the struggle out here. After 14 minutes of analysis, how K shaped is our case shaped America?

[Lindsay Piegza]

Well, I would argue it's not necessarily a K shaped but more of an E shaped recovery. It's going to be uneven. Certainly there is this dichotomy across classes, particularly as we see household net worth significantly increase for those at the upper end of the income spectrum as a result of a run up in asset prices via the housing market, the equity market, a benefit which the middle class and the lower end of the income spectrum has not benefited from. But we do see other stimulants coming out into the economy. The one big beautiful bill act averting a reset to a higher tax rate. This won't necessarily provide a windfall to spending, but it will help to maintain the current levels of expenditures across those different rungs in the east. Shaped recovery. So uneven, yes, but not necessarily a K shaped. Where some are particularly perpetually, I should say, doing better and others are losing momentum.

[Unnamed Host/Interviewer]

How much of an impact are you expecting, Lindsey, from some of the President's legislation? The one big beautiful bill. I mean are you factoring that into your GDP forecast, your consumer spending forecast? How is that impacting things?

[Lindsay Piegza]

Well, we're looking at the overall impact on the economy for 2026 to be upwards of several 10 of a percentage point. That doesn't seem like a lot. But again as we're looking at an economy at a growth rate at 2.2% last year, any additional boost to consumers or businesses is a welcome step in the right direction. But right now I think the biggest factor is going to be how much of a dampening effect does that overhang of elevated prices take out of consumers ability to spend out in the marketplace.

[Paul]

So, so help us here with what Alexis said. And she took her cue from the President of the United States. He's out with a tweet saying it cost two points. The shutdown Lindsey pigs are just back of the Stifel Nicholas envelope. How much do you add on to real GDP to get where we are now?

[Lindsay Piegza]

I think the President may be looking at this overly. It may be accounting a bit more for the shutdown than I would assign. I would say maybe in line with the BEA's forecast of about 1%. But remember, whatever we lost at the end of the year, we typically regain when the government reopens. And so if there was a 1% loss, we're likely going to see an even stronger 1% boost across the first quarter. Now this time. It is a little more complicated because we did see that second round shutdown, although it was much shorter and much less disruptive. But I would expect that to be reclaimed. Anything that was lost at the end of the year to be reclaimed at least within the first half of 2026.

[Paul]

Dr. Pizza, thank you so much.

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