Cracks Beneath the Surface
On paper, the U.S. economy looks solid. Inflation is down, GDP is expanding, and corporate earnings keep surprising to the upside. But when you dig into the details, the picture isn’t as clean — and that helps explain why consumer sentiment hit near-record lows earlier this year.
Here are some of the weaker signals hiding behind the headlines:
Economic growth: GDP peaked at +4.4% in Q3 2023, but slipped to –0.5% in Q1 2025 before rebounding modestly. Momentum is clearly fading.
Confidence: Consumer sentiment improved slightly in July, but remains far below pre-pandemic levels.
Earnings: Q2 results were solid, yet companies remain cautious about tariffs and trade deals ahead — a reminder that markets trade on expectations, not just results.
Yields: The 10-year Treasury yield is higher than a year ago — and far higher than five years ago — signaling investors demand greater returns amid fiscal uncertainty.
Jobs: July’s unemployment rate ticked up to 4.2%, while average weekly hours declined — a potential warning of slower hiring or layoffs.
Inflation: Down sharply from the 9.1% peak in 2022 to 2.7%, but still not enough for the Fed to ease rates, especially with tariff impacts looming.
Why It Matters
Individually, none of these data points scream “recession.” Collectively, though, they point to a softer, more fragile economy than the headline numbers suggest. That disconnect helps explain why so many Americans feel pessimistic, even if the data doesn’t confirm a downturn.
Takeaway
The U.S. economy isn’t broken — but it isn’t firing on all cylinders either. Headline numbers show stability, yet beneath them lies an undercurrent of slowing growth and fragile confidence. That’s why, even in expansion, it can still feel like something’s not quite right.
— Lauren
Editor, American Ledger