More than ever these days, gauging the health of the economy is almost like trying to gauge the health of Schr\u00f6dinger’s cat.<\/p>\n
Depending who you talk to, it is both on the upswing and trending downward, showing promise and also headed for collapse.<\/p>\n
Take, for example, the fact that after months of dismal jobs numbers and recession predictions, a recent White House press release touted the U.S. Bureau of Economic Analysis\u2019 revision of second quarter GDP numbers as \u201cexplosive growth\u201d for the economy \u2014 along with positive reactions from various financial experts.<\/p>\n<\/p>\n
The revision in question showed a GDP increase of 3.8% in April through June of this year, previously reported as 3.3%. That\u2019s also up from -0.6% GDP growth in quarter one and the fastest pace of growth since the third quarter of 2023.<\/p>\n
The GDP growth was driven by a slowing of imports and a greater increase in consumer spending than previously reported \u2014 led by transportation, financial and insurance services.<\/p>\n
As such, the White House press release crowed that it was all part of \u201cAmerica\u2019s economic resurgence\u201d and \u201cthe groundwork for a long-term restoration of American Greatness.\u201d<\/p>\n
But is the economy really surging back the way the White House suggests?<\/p>\n
Part of the problem in finding a consensus on how the economy is really doing is that the traditional indicators of a healthy economy tell a conflicting story. GDP and consumer spending, for example, are up, while at the same time employment estimates for September show that the U.S. continues to bleed jobs.<\/p>\n
ADP data \u2014 used in lieu of the usual U.S. Bureau of Labor Statistics (BLS) numbers, which are unavailable during the government shutdown \u2014 suggest the private sector lost 32,000 jobs last month (1).<\/p>\n
That\u2019s following last month\u2019s dismal BLS report that showed the economy only added 22,000 jobs in August, while the unemployment rate hit a near-four-year high of 4.3%. The Federal Reserve, meanwhile, cut interest rates, but the effects of tariffs and inflation are still taking their toll on American pocketbooks.<\/p>\n
One explanation for the mixed economic signals is that the rising consumer spending is only being driven by a small percentage of the highest-income earners.<\/p>\n
Story Continues <\/p>\n
Research by Mark Zandi, the chief economist for Moody\u2019s Analytics, showed earlier in the year (2) and again recently (3) that the top 10% of earners in the country are responsible for just under 50% of all consumer spending.<\/p>\n
The data also show that the bottom 80% \u2014 anyone making under $175,000 a year \u2014 are merely keeping pace with inflation (4). He added that if those high-earners \u201cturn more cautious\u201d about spending, \u201cthe economy has a big problem.\u201d<\/p>\n
Meanwhile, Harvard University professor and economist Jason Furman cautioned in a social media post that \u201cInvestment in information processing equipment & software is 4% of GDP. But it was responsible for 92% of GDP growth in the first half of this year\u201d \u2014 adding that, when excluding those categories, GDP only grew 0.1% over the first half of the year.<\/p>\n
Add to that a Reuters analysis suggested \u201cmomentum appears to be slowing as the effects of tariffs and policy uncertainty start to filter through\u201d (6). EY-Parthenon senior economist Lydia Boussour told the outlet that despite \u201can expected moderate real GDP gain in the third quarter \u2026 growth is projected to decelerate in the second half of the year.\u201d<\/p>\n
If that\u2019s not ominous enough, Yale\u2019s Budget Lab projected that the debt load and rising interest rates brought on by President Trump\u2019s One Big Beautiful Bill could prove a ticking time bomb for the economy (7). They found that despite providing a short-term boost to GDP, after 2027 \u201cgrowth slows such that by 2054 the level of GDP is more than 3% smaller than it would have been if the bill were not enacted.\u201d<\/p>\n
Read more: US car insurance costs have surged 50% from 2020 to 2024 \u2014 this simple 2-minute check could put hundreds back in your pocket<\/a><\/p>\n It turns out that, like many experts, the average American also doesn\u2019t have a rosy outlook for the economy.<\/p>\n A Fannie Mae survey from September, for example, found that 67% of consumers feel the American economy is \u201con the wrong track,\u201d up 3 points from August.<\/p>\n Meanwhile, earlier this month Pew Research Center reported that 74% of U.S. adults described the economy as \u201conly fair or poor,\u201d while just 26% labelled it as \u201cexcellent or good\u201d (8).<\/p>\n The Pew survey added that 42% of Americans blamed \u201crising prices and personal expenses\u201d for their negative view of the economy. As well, 53% said that Trump\u2019s policies have made the economy worse, as opposed to 24% who said they\u2019ve improved economic conditions. And 46% said that they expect the economy to get worse in a year, while only 29% believe it will be better.<\/p>\n For those struggling now, or anticipating troubling economic times ahead, experts agree on a number of simple things you can do to both help navigate a rough economy and prepare for possible worse conditions, including a recession, down the line.<\/p>\n To start, many suggest drawing up a financial plan \u2014 including a budget you can stick to \u2014 while boosting your savings and\/or emergency funds<\/a> as much as possible.<\/p>\n Fidelity says that it\u2019s a good idea to try and keep long-term financial goals in mind and, to that end, stick with your investments even if the market starts heading in the wrong direction (9). \u201cHistorically,\u201d they note, \u201cthe stock market has produced positive returns following significant corrections and bear markets.\u201d<\/p>\n And Equifax advises paying down debt<\/a> as much as possible, especially when it comes to mortgages and car payments (10). They also say that updating your resume and reconnecting with professional contacts doesn\u2019t hurt, in the event that you find yourself out of work.<\/p>\n Join 200,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n CNN(1<\/a>); Wall Street Journal (2<\/a>); Bloomberg (3<\/a>); @Markzandi \/X (4<\/a>); @jasonfurman\/X (5<\/a>); Reuters (6<\/a>); The Budget Lab (7<\/a>); Pew Research Center (8<\/a>); Fidelity (9<\/a>); Equifax (10<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"More than ever these days, gauging the health of the economy is almost like trying to gauge the…\n","protected":false},"author":2,"featured_media":216112,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,16306,155,101,122448,38473,122449,3123],"class_list":{"0":"post-216111","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-consumer-spending","10":"tag-dave-ramsey","11":"tag-economy","12":"tag-explosive-growth","13":"tag-gdp-growth","14":"tag-gdp-increase","15":"tag-white-house"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/216111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=216111"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/216111\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/216112"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=216111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=216111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=216111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}