Economic Dashboard

What's happening in the economy?

UPDATE: Below was written in March. The Consumer Debt numbers were updated May 6.

A one paragraph take: The American economy has split in two. GDP growth has slowed to 0.7%, well below the 3–5% the administration promised, and employers have cut jobs three of the last five months. The tariffs that were supposed to revive American manufacturing have instead coincided with 90,000 factory jobs lost in 2025 — the third straight year of decline. Real wages are up less than 2% while housing, healthcare, and education costs rise two to three times faster, and households have taken on $1.28 trillion in credit card debt at 22% interest to cover the difference. The Iran war has pushed gas prices up 30% in six weeks. The federal government borrows $7 billion a day, keeping interest rates high for everyone else. The share of national output going to workers’ paychecks just hit its lowest point since 1947 — the economy is producing more, but less of it ends up in a paycheck. Consumer confidence has dropped below the level recorded at the start of every recession in the last fifty years. The stock market is near record highs, but the people looking at portfolios and the people choosing between groceries and a doctor’s visit are not living in the same country.

(Original preamble about what inspired this document is now a footnote.)¹

Data current through March 19, 2026 (latest GDP, jobs, and inflation reports.)

1. Real GDP Growth

The total physical output of the country—every car built, every meal served, every hour of legal advice—adjusted to remove the “noise” of rising prices so we can compare different time periods.

• Current Figure: 0.7% : A revision of Q4 2025 down from an already‑soft 1.4%. The economic engine was sputtering heading into 2026 before the Iran war started.

• The U.S. and the World: The U.S. is the world’s largest economy, but operates in the context of a global economy where growth is subdued. The 21 countries in the euro area² —essentially “Europe’s economy”— are projected to grow only about 1¼–1½ percent in 2025–26. China’s outlook is restrained by cautious consumers (weak domestic demand) and a recovering real estate sector.³ American companies have weaker overseas customers, and tariff uncertainty makes businesses hesitant to hire when they can't predict what their imports will cost or where their next orders will come from.

• The Trajectory: 0.7% is a near-collapse from the 4.4% growth seen in Q3 2025. Full-year real GDP growth slowed to 2.1% in 2025 from 2.8% in 2024, Biden's final year in office. Tax breaks that kick in starting in 2026 might goose growth to come. If that happens will wages go up too?

• Is this a “Golden Age”?: The current 0.7% rate falls sharply short of the administration’s “Golden Age” targets of 3-5%. (Their boasts can be found in this footnote⁴)

• The Labor Market: The February jobs report showed employers cut 92,000 jobs — the third time in five months that payrolls shrank. Revisions turned December negative. The unemployment rate rose to 4.4%. Losses were broad: health care, manufacturing, construction, federal government, and information services all shed jobs. Manufacturing alone lost 12,000 positions, despite tariffs that were supposed to bring those jobs back. Wages rose a little, but that only helps the people who still have work.

• Consumer Spending: Consumer spending drives 68–70% of GDP and may be starting to buckle. Retail sales fell 0.2% in January — the biggest drop since May — and that was before February's 92,000 job losses. The risk is a feedback loop: people lose jobs, spend less; companies see less revenue, so they cut more jobs. (This is not to freak you out, it's just an attempt to explain the context in which these numbers are important.) Are the wealthy propping up the headline? Moody's estimated that the top 10% of earners drove roughly half of all consumer spending in early 2025.

  • To Watch: Economists estimate tax refunds are running about 20% above last year, which may prop up spending through the spring. But this isn't organic economic strength. ⁵ Will the February job losses weaken consumer spending making Q1 GDP closer to 1%. And if it is determined that the job losses are a part of structural decline then it’s a battle between a one-time check from the IRS and persistently fewer weekly paychecks.

• Shutdown Effect: In Q4 2025, real GDP growth was held back by declines in government spending and exports. Federal government spending and investment fell 16.7% during the shutdown, subtracting 1.16 percentage points from Q4 growth.⁶ That’s not likely to be repeated, but other contributors to weak GDP might be, like ongoing trade uncertainty regarding tariffs.

• Small Business taking it in the teeth: The chaos caused by the tariffs pressured businesses with fewer than 50 employees to cut 120,000 jobs in November alone, the largest for any month since May 2020, according to the ADP National Employment Report. S&P Global Market Intelligence found at least 717 companies that filed for bankruptcy in 2025 through November, the most since 2010, the Washington Post reported. (Bloomberg)

2. S&P 500 Equal Weight Index

UPDATED 5/8/26

This section is gonna feel dense. And maybe it is! But with the former Attorney General of America answering questions about the Epstein files by citing the growth of the S&P 500, it creates an appetite for a more broad-based understanding of how the market’s behavior reflects the broader economy.

The Standard & Poor’s 500 Equal Weight Index is a better indicator than the one Bondi cited because it treats all 500 companies the same rather than letting the biggest ones dominate the number. The regular S&P 500 tells us how Apple and Nvidia are doing. The Equal Weight Index tells us how the market is doing — the average stock, not just the giants. Both draw from the same 500 companies, which together represent roughly 80 percent of total U.S. stock market value.

Why the distinction matters: From 2023 to 2025, the Magnificent Seven drove the market’s gains by such a wide margin that the headline numbers looked much better than what most companies were actually experiencing. Think of it as the S&P 7 versus the S&P 493. By mid-February 2026, that gap was finally closing. The Equal Weight Index was pulling ahead, powered by the physical economy — Energy, Materials, and Industrials. For a normal person, that was a meaningful shift: when the Equal Weight Index leads, it signals that a regional bank in the Midwest is healthy enough to lend, a construction firm in the South has enough orders to hire, a manufacturing plant in the Rust Belt is actually making more parts. The recovery was moving beyond the screen and onto the street.

The war reversed that. The energy shock from the Iran conflict crushed earnings expectations in consumer and materials groups. A new AI-and-semiconductor rally pulled money back into the same handful of megacap names. UBS now estimates that only about 42 stocks are meaningfully driving the index — less than half the roughly 100 “effective constituents” typical in past decades — and just five tech companies (Alphabet, Nvidia, Amazon, Broadcom, and Apple) account for more than half of the S&P’s recent gains. Wall Street concentration has hit an all-time high. The broadening that started the year is over.

What this means now: the headline index looks resilient, but the resilience is fragile. As one strategist told the Financial Times, if sentiment toward AI-linked names reverses, the downside for the index “could be significant.” And as a Citi strategist put it, while the Strait of Hormuz remains constrained, broad-based earnings growth is off the table.

3. The Dow Jones Industrial Average (The “50,000” Marker)

The DJIA is a curated list of 30 “Blue Chip”⁷ companies that leaders consider the stalwarts of American industry. Current Level: 49,625 (Closing Feb 20, 2026)

• The Signal: This signals that major investors are still betting on the U.S. — some because they see it as the safest place to ride out global uncertainty, and some because they think it's where their money will grow so that they can afford that summer place at the lake.

• The Limitation: The DOW does not necessarily reflect national prosperity, and frankly can be used to mask the health of the broader economy by politicians who want a quick and easy way to fool you (or distract from troubling questions). Companies may be maintaining stock prices through accounting moves or because it fired 10,000 people. The cost savings flow straight to the bottom line, Wall Street applauds, the stock rises, and the Dow ticks⁸ up. That’s not a signal of national prosperity as we’ve come to think of it in fair-minded political discussions. That’s a number going up because people lost their jobs.

• The Dow is more like good skin than cardiovascular health. It’s highly visible, moves with news, and tells you something real about market mood and the fortunes of a few emblematic firms. But it’s narrow (30 stocks), quirky (price‑weighted⁹), and can look great even when large parts of the economy are struggling.

4. Income and Inflation

If we are trying to figure out the middle‑of‑the‑pack paycheck for an American worker or household, adjusted for inflation the gold standard is the Census Bureau real median household income, but that runs on a long delay. We won’t see the 2025 number until September. This is the single best measure of whether economic growth is actually reaching regular people, because unlike averages, it can’t be pulled upward by a few people making millions. BLS will release Q1 2026 real median weekly earnings on April 16. Until then, the best real-time proxy is BLS real average weekly earnings, which we’ll use with an important caveat.

• Current real pay gain: Three numbers tell the story. The February jobs report headline showed average hourly earnings up 3.8% over the year — the one genuinely positive number in a report where employers cut 92,000 jobs. But 3.8% is the nominal figure, before inflation. Subtract the 2.4% CPI and real hourly earnings grew just 1.4% year-over-year, the same as January. Because workers logged the same number of hours per week as the month before, real average weekly earnings came in slightly higher at 1.7% — down from 1.9% in January, and the only reason weekly pay didn’t fall further.

  Remember: all of these are averages, which means they’re vulnerable to exactly the distortion we described above. Wages rising while jobs are falling means the people who still have work are doing fine — and the people who just lost their jobs aren’t captured in the wage data at all. It’s the K-shape in a single data point. The headline sounds healthier than the paycheck feels. (Caveat about whether this is a broad improvement — the so-called “K-shaped economy” in the footnote.)

• Inflation: As of the February CPI report, the general inflation rate is 2.4%—which looks good on a government press release. It is being pulled down by falling prices in “virtual” sectors like electronics and software. The Federal Reserve believes a different gauge is more accurate: the personal consumption expenditures (PCE) price index.¹⁰ As of January 2026, PCE was 2.8% year-over-year — but core PCE, which strips out food and energy and is what the Fed actually watches, came in at 3.1%, and rose 0.4% in a single month. That's not drifting toward the Fed's 2% target. It's moving away from it. It’s why the Fed didn’t cut rates this week. Meanwhile, the prices for the things you cannot skip—Housing, Healthcare, and Education—are rising significantly faster than your 1.9% raise, so to think through what the American household is going through, we need to think about the psychologically weighted purchases.

The Big Three Breakdown:

• Housing: According to Cotality, advertised rents rose approximately 5.2% over 2025, building on the large jumps seen earlier in the decade. And even as advertised rents cool a bit, mortgage rates only just slipped back below 6 percent for the first time since 2022, leaving buying well out of reach for many would‑be owners.” As reported by Starts at 60, these persistent increases come as housing shortages deepen. Because housing typically consumes 30–40% of a median household’s budget—the federal threshold for being “cost burdened”¹¹—even small year-to-year rent increases can absorb a disproportionate share of a family’s income.

• Healthcare: According to the 2025 Milliman Medical Index, the total annual cost of healthcare for a typical family of four with employer-sponsored coverage has reached $35,119. This represents a 6.7% increase in just one year and means costs have nearly tripled since 2005.

  • The Context: Over a similar period, the Census Bureau reports that real median household income has remained essentially flat—measured at $83,730 in 2024, a level not significantly different from 2019. Stressful!

  • The Squeeze: Healthcare now consumes over 40% of a typical family’s total income, compared to closer to one-fifth two decades ago. As noted in the Milliman 20th anniversary release, the 6.1% annual increase since 2005, outstrips the 1.9% wage growth. Meanwhile, CBO projects that healthcare changes in the OBBBA¹² — including the expiration of enhanced ACA tax credits — will cause approximately 5 million people to lose health insurance in 2026.

    • A KFF survey released March 19 found that nearly one in ten people with ACA plans last year have already dropped coverage after enhanced subsidies expired, with more than half of those who kept their plans cutting back on food and clothing to afford premiums.

    • UPDATE 3/12/26: One-third of Americans — an estimated 82 million people — say they are making sacrifices, including skipping meals or driving less, to pay for care, according to a new survey by West Health-Gallup Center on Healthcare in America.

  • Education: For the 2025–26 academic year, average published tuition and fees rose by 2.9% at public four-year colleges and 4.0% at private nonprofit institutions, according to the College Board’s Trends in College Pricing 2025. These increases either match or outpace the general inflation rate.

• How do People feel? The Washington Post poll released 2/27 finds:

  • “Health care, new cars and new homes feel unaffordable to most Americans… [who] say that they can afford basic necessities like their current housing costs, groceries, utilities and gasoline. But large numbers across income levels also say larger expenses and the cost of things associated with an enjoyable life — including taking a weeklong vacation — are out of reach.”

• Iran war oil update:

  • In March of 2026 the Iran war increased the price of gas:

    For a household with two drivers burning 25 gallons a week (a standard US average for commuters), a $0.82 price hike (the jump between January and mid-March 2026) acts as a $20 weekly tax.

    January 2026: $2.81 (Recent Low) Mid-March 2026: $3.63 (Current National Avg, AAA) The Delta: A 29% increase in roughly six weeks.

    • Diesel has jumped to $4.83/gallon (a 28% increase since the recent conflict began). Fuel accounts for 50%–60% of total operating costs for shipping. When diesel spikes, “fuel surcharges” appear on everything from Amazon deliveries to grocery invoices within 15–30 days.

4.5 The Pipeline: What Businesses Are Paying Now That You’ll Be Paying Soon.

March 2nd the ISM Manufacturing PMI showed American factories are growing for the second straight month in February. (This monthly survey of purchasing managers at factories across the country (PMI=Purchasing Managers Index) asks them whether things like new orders, production, hiring, and prices are better, worse, or the same as the month before. The responses get compressed into a single number. Above 50 means the manufacturing sector is expanding; below 50 means it's contracting.) The number hit 52.4 — only the third time in roughly 40 months the sector has expanded. But factories aren't hiring yet (robots are winning¹³) and aren't building up inventory. Inflation watch: what factories are paying for raw materials and components is rising — tariff costs are building at the start of the production chain, and could eventually show up in what consumers pay.

• UPDATE (3/6/26): The February jobs report has confirmed a concerning pattern for the industrial sector. Manufacturing lost 12,000 jobs. This continues a broader downward trend. U.S. manufacturing shed over 90,000 jobs in 2025, the third consecutive year of decline, according to the Bureau of Labor Statistics. The administration’s signature economic policy intended to bolster the sector—tariffs designed to replace overseas production with US goods—has instead coincided with manufacturing shedding jobs rather than creating them.

On February 27, the stock market dropped sharply after a hotter‑than‑expected wholesale inflation report. That’s the prices businesses pay each other — for steel, for chemicals, for shipping containers full of clothes — are going up faster than anyone expected, not slower. That matters to you because businesses don’t eat those costs. They pass them on. When it costs Target more to stock the shelves, it eventually costs you more to fill your cart.

In January, the Producer Price Index (PPI)— the government’s measure of what businesses pay each other — rose 0.5% in a single month, nearly double the 0.3% rise economists were expecting. Strip out food and energy¹⁴, which bounce around a lot, and it looks worse: that “core” number jumped 0.8% versus a 0.3% forecast, pushing the year‑over‑year core rate to about 3.6%, its highest level in roughly ten months.

Those prices aren’t slowing down. Wholesale prices are re‑accelerating instead of gliding gently back toward the Federal Reserve’s comfort zone. The biggest jumps were sharp price increases in services and trade margins—the markups wholesalers and retailers charge—with especially big moves in categories you’d actually notice: like clothing and shoes, chemicals, telecom services, health and beauty products, and some food and alcohol, as companies begin passing more of their tariff and cost increases along the supply chain.

That catches my eye. Here’s why:

Since President Trump instituted his sweeping import taxes, there’s been a prediction: prices will go up. And they have — the average family is paying more. But they haven’t gone up as much as experts expected, and there’s a specific reason. Businesses saw the tariffs coming and stockpiled inventory in advance, shipping out what they’d already bought at the old prices. That bought time. But warehouses empty. The expectation was that once businesses burned through their pre-tariff stock, they’d start passing the real cost increases along — and that the turn would come early in the new year. That’s what this number suggests is happening.

Wall Street didn’t treat this as a one-month blip. Investors read it as the turn — the moment the warehouse runs dry and the real costs start showing up on price tags. That’s why the market sold off: not one bad number, but what one bad number says about the next six months.

• UPDATE (3/12/26): We now have more data on what follows the “empty warehouse.” Core consumer inflation is stuck around 2.5% because those pipeline costs are finally hitting price tags. The buffer is gone. We are now in a period where the cost of living is rising just as the number of people with paychecks is falling.

5. The Misery Index

The Misery Index—the unemployment rate plus the inflation rate— is a quick-and-dirty (and possibly misleading!) measure of how much economic pain people are feeling.¹⁵

• Current Score: As of the February 2026 jobs report, the index sits at approximately 6.8, combining a 4.4% unemployment rate with 2.4% inflation.

• A score of 6 or lower is good. Workers can easily move jobs and prices aren’t eroding paychecks too quickly.

  • Pardon me for an interlude: “Prices aren’t eroding paychecks too quickly.” This kind of jargon makes me want to nap. I fall into it. I am sorry that I do. It should be “Paychecks can cover the goods people need because prices haven’t increased too quickly.” (Why this is better in the footnote.¹⁶ )

• A Misery Index between 8 and 10, things start to pinch — jobs get harder to find, or prices start outrunning wages, or both. Above 10, people are angry. (It hit 20 under Carter in 1980. Reagan used it to end his presidency.)

• At 6.8, we are slightly above that ideal: Things are okay but not great. Prices have calmed down from the worst of it, but now the worry is shifting — fewer people are panicking about what things cost and more people are wondering whether they'll still have a job six months from now.

• Why is this Index Misleading? This measure doesn't know that your rent went up 12% or that your grocery bill feels nothing like 2.4% inflation. It's a blunt instrument. Useful for spotting big trouble, not for describing your life.

• Caveat: Economists like Michael Strain at AEI argue that the raw index may overstate the “misery” in the current labor market because the way we measure the labor force needs to change. He notes that a 4.4% jobless rate is still historically low and that layoffs remained subdued in January. In this view, much of the slowdown in payroll growth reflects a sharp drop in net migration rather than collapsing labor demand. For Strain, the bigger risk for 2026 is inflation re‑accelerating rather than a spike in joblessness—a nuance that the simple sum of the Misery Index can’t fully capture.

  • February complicated this picture. 92,000 jobs lost. Kevin Hassett (3/6) borrowed from Strain arguing that reduced immigration has lowered "breakeven" job growth to roughly 30,000-40,000 per month, making the loss less alarming than it appears. But no one's breakeven estimate is negative 92,000.

6. Labor Productivity (Nonfarm Business Sector)

The amount of goods and services produced for every hour worked. If it’s high, you are likely to get a raise because you’re genuinely creating more value, and the cost of your groceries stays flat because the store is more efficient. If productivity is low, businesses have to raise prices to pay for your raise. (Or you don’t get one.)

The “Golden Era” Standard: Donald Trump talks about America being in a “Golden Era,” but in the actual Golden Era the post-war boom (1947–1969), nonfarm business productivity averaged 2.8% to 3.0%, with frequent peaks above 4.5%. This is partially what allowed a single-earner household to buy a home and a car while prices stayed flat. To deliver the “Golden Era” that the administration promises, productivity needs to sustain 3.0%+ for several consecutive quarters.

Current Picture: Three stories in one number.

The Quarterly Rate (Q4 2025): 2.8%. A comedown from Q3’s revised 5.2%, but still above the long-term historical average of 2.2% — the rate nonfarm business productivity has averaged since 1947. So this is a quarter where the economy was genuinely producing more per hour than the typical American quarter over the last eight decades. The administration will call this healthy. They’re not wrong — on this number alone. But the whole point of this exercise is that single numbers don’t tell the whole story. Keep reading.

The Year-Over-Year Rate (Q4 2025): 2.8%. This smooths out quarterly volatility and gives a more honest picture of the underlying trend. It’s meaningfully better than the stagnant 2010s (when productivity mumbled into its cup at near 1%) and sits right at the long-term historical average. But it is still short of the 3%+ “Golden Era” threshold the administration has promised.

The Manufacturing Alarm: Manufacturing productivity fell 1.9% in Q4, with output dropping 2.2%. Manufacturing unit labor costs — what it costs to make each unit of product — spiked 8.3%, the largest jump since Q3 2022.

• Throughout 2025, manufacturers were paying more for steel, aluminum, and other components because of tariffs — the same cost pressure showing up in the PPI data (Item 4.5). But they didn’t charge customers more. Instead, they shipped out materials they’d bought in bulk before the tariffs hit — older stock, purchased at the old prices. That worked until the warehouse got low.

• More expensive inputs, no cheaper stock to fall back on, and output that was actually declining accounts for the 8.3% spike in what it costs to make each unit. That cost has to go somewhere. Either into higher prices for you (which the PPI data suggests is already happening) or into layoffs (which the small business data in Item 1 already shows).

• This doesn’t prove tariffs caused the spike — other factors, including weaker demand and the residual effects of the government shutdown, contributed to the output decline. But the pattern fits: the sectors most exposed to imported input costs are the ones where unit labor costs are rising fastest.

The Broken Transmission: The “magic trick” often ascribed to productivity — everybody wins! — operated reliably from 1947 to the early 1970s. Productivity went up, wages went up with it, and prices stayed manageable. Since approximately 1973, that link has weakened dramatically. Productivity has grown, but the gains have increasingly flowed to shareholders and executives rather than to the median worker’s paycheck.

The Q4 2025 release contained a number that makes the break visible: labor share — the percentage of output that goes to workers as compensation — fell to 53.8%, the lowest level in the entire history of the series, which begins in 1947. The transmission isn’t just broken. By this measure, it is worse than it has ever been.

Productivity is a necessary condition for broad-based prosperity — without it, the math doesn't work at all — but it is no longer a sufficient one. A smaller portion of what the economy produces is showing up in paychecks than at any point in modern American history. You can believe that's a temporary lag or a structural failure — but either way, these productivity numbers are not yet a cause for celebration for the people whose living standards are supposed to be the point of the exercise.

More than ever, the question isn’t just “is productivity growing?” but “who captures the gains?” A 3% productivity boom that flows entirely into stock buybacks and C-suite compensation would hit the “Golden Era” target on paper, increase your campaign donations, allow for blind-eye turning to obvious breaches of public norms, while leaving the median household exactly where it was.

The Spin: Watch for which number officials cite. If administration officials quote Q3’s 5.2% without mentioning Q4’s 2.8%, they are cherry-picking the most flattering quarter available. If they cite the 2.8% year-over-year figure, that’s legitimate — but ask the follow-up: if productivity is growing and the labor share just hit a historic low, where are the gains going? The 53.8% figure is the most important number in this release, and the one least likely to appear in a press conference.

• Not so fast: As anticipated above, White House economic advisor Kevin Hassett, responded (3/6/26) to the loss of 92,000 jobs by pivoting to productivity. "You can have strong output and not really magnificent job growth," he told CNBC. "The headline is the continued rise in productivity among employed workers." But as readers of this space know, that’s not the whole story. Yes, productivity rose, but the share of that productivity going to workers just hit the lowest level since 1947.

One way to track this yourself: Watch productivity alongside real median wage growth and treat a widening gap between the two as a warning signal — a sign that the engine is running but the drive shaft to the wheels is disconnected. (If that indeed is how an engine and drive shaft work).

7. Prime-Age Labor Force Participation (Ages 25–54)

The percentage of people in the “prime” of their lives who are either working or looking for work. It ignores students and retirees to focus on the “heavy lifters” of the economy.

Current Level: 83.9% (February 2026). Down from 84.1% in January, which had been the highest level since 2024. The drop is small but directionally significant: in an economy that was pulling people in through opportunity, this number would be rising alongside job growth, not falling alongside job losses.

The “Desperation” Pull (I must work.) When “The Big Three” costs (Housing, Health, Education) explode, households that used to survive on one paycheck suddenly need two. People who wanted to be stay-at-home parents or full-time caregivers are forced back into the cubicle just to break even.

The “Demand” Pull (Get me to the widget maker on time): This is the healthier version. It means new factories are opening, companies are desperate for human beings to run their AI-integrated systems, and they are offering enough money and flexibility to make work more attractive than the “sidelines.”

The “Golden Era” Test: In a true Golden Era of the kind the president promises this number stays high because opportunity is everywhere. If it stays high while Real Wages are only growing at 1.9%, it suggests the desperation story is winning—people aren’t working because they want the new widgets; they’re working because they can’t afford the rent on the house where the widgets are kept.

So: At 83.9%, the “magnet” of productive work is clearly operating, but we need to check the Quit Rate (Item #8) to see if these people feel like they have any power once they get in the company email system and learn where the break room is. If participation is record-high but people are too scared to quit their jobs, it means the “sidelines” aren’t an option anymore— people have to work to stay afloat.

8. The Quit Rate

The percentage of the total workforce that voluntarily walked away from their job this month. Current Level: 2.0% (Approx. 3.2 million people).

What this means in the real world:

• The “Golden Era” for Workers (3.0%): This was the Great Resignation peak. In this world, employees had the ball. They could tell a bad boss to shove it because there were three other jobs down the street paying $2 more an hour. (And they could mix their metaphors between playing ball and shoving it, and no one said boo.)

• The “Stagnation” Signal (1.5% or lower): This is a bummer. You stay in a job you hate, with a supervisor who disrespects you, because you’re terrified that if you leave, you won’t find anything else.

• The Current Status (2.0%): We are in a “Slow-Motion” economy. The 2.0% rate is exactly the long-term historical average, but it’s a significant drop from the 3% which gave workers power two years ago. ¹⁷ The result is what analysts at Indeed Hiring Lab call a game of musical chairs where the music has stopped — everyone's staying put, which means fewer open seats for you, and less reason for your boss to pay more to keep you from leaving. (That’s why your 1.9% wage growth has stalled.)

9. Consumer Debt

Revised May 6: Household Debt & The Squeeze

This section tracks the total amount American households owe on credit cards, auto loans, and other non-mortgage debt. It is the metric that reveals how people are actually funding their lives when wages don’t cover the “Big Three” (Housing, Healthcare, and Food).

Current Picture: $1.31 Trillion (Q1 2026)

According to the New York Fed’s Q1 2026 data, non-mortgage debt has hit a new record plateau. While the breakneck “surge” of 2024 has stabilized, it has done so at a historic high, leaving the American consumer with zero breathing room.

The Cost: 21.5% - 22.8% Interest

The Federal Reserve reports that the average interest rate on credit card accounts carrying a balance is now roughly 21.5%, with new card offers averaging 22.1%. At these levels, a household carrying a balance of $6,800 pays roughly $1,500 a year in interest alone—money that reduces the principal balance barely at all, buys nothing for the family, and removes liquidity from the local community.

The Usage: Survival, Not Luxury

Nearly half of cardholders (47%) now carry a month-to-month balance. Crucially, Bankrate’s 2026 Credit Card Debt Report reveals that 33% of debtors—up from 28% in 2024—cite “day-to-day expenses” like groceries and utilities as the primary reason for their debt. For a third of borrowers, credit is no longer for “extra” spending; it’s a high-interest utility.

What this means in the actual economy

This is the hidden, unhealthy engine behind the consumer spending that still shows up in GDP. While headline growth looks steady, it is increasingly “borrowed” growth. Each dollar of credit card debt at current rates costs roughly 22 cents a year just to service. That is money that cannot go to restaurants, savings, or the discretionary spending that feeds long-term growth. The headline numbers are essentially “borrowing from the future to flatter the present.”

The Warning Signals

• Aggregate Delinquency: As of early 2026, 5.1% of all outstanding household debt is in some stage of delinquency, a steady climb from the previous year.

• The Credit Card Crisis: The transition rate into serious delinquency (90+ days overdue) for credit cards has climbed toward 7.4%, indicating that the “lag” between high interest rates and household failure is finally closing.

• The Lower-Income Squeeze: In the lowest-income ZIP codes, serious delinquency rates for credit cards have pushed above 20%. This represents a level of concentrated financial distress not seen in decades.

The 401(k) Paradox

Vanguard’s “How America Saves 2026” report highlights a record 6.4% of 401(k) holders took a hardship withdrawal in 2025—nearly triple the pre-pandemic rate. The leading reasons? Avoiding foreclosure, eviction, and covering medical expenses. Meanwhile, average balances for high-earners hit record highs. The same retirement system that is building wealth for those with stable incomes is being used as a high-penalty emergency fund for those living paycheck-to-paycheck.

The Connection

If the Quit Rate shows people are staying in “meh” jobs out of fear, and the costs of the “Big Three” are outrunning pay, then Consumer Debt is the bridge making up the difference. But at 22% interest, it is a bridge that charges a massive toll. When the administration says the “economy is great,” they are looking at the volume of traffic crossing the bridge; the households on that bridge are looking at the structural cracks and the rising cost of the crossing.

10. The Federal Deficit and Fiscal Trajectory

Every year, the federal government spends more than it collects in taxes. The difference is the deficit. To cover it, the government borrows money by selling Treasury bonds — essentially IOUs — to investors around the world. The national debt is the pile of IOUs that has accumulated over decades of deficits.

Why you should care: The government borrows money in the same marketplace where businesses borrow to build factories and where you borrow to buy a house. When the government needs $7 billion a day — which it currently does — it is competing with every other borrower for the available pool of money. The more the government borrows, the more it drives up the price of borrowing for everyone else. That price is the interest rate. So when your mortgage rate is 6% instead of 4%, part of the reason is that the U.S. government got to the lending window ahead of you and took a very large share of what was available. The deficit isn’t an abstraction that lives in Washington. It lives in your monthly housing payment.

There’s a second cost. The government has to pay interest on all those accumulated IOUs. In FY 2025, that interest bill crossed $1 trillion for the first time — more than the entire defense budget. Every dollar that goes to interest is a dollar that cannot go to roads, schools, veterans’ care, or tax relief. The debt doesn’t just crowd out your borrowing; it crowds out your government’s ability to do things for which we constitute a government.

Current Picture: The FY 2025 deficit was $1.8 trillion. Federal debt held by the public (all those IOUs) has reached 99.8% of GDP. The government now owes roughly as much as the entire country produces in a year.¹⁸ CBO projects cumulative deficits of $26 trillion over the next decade. There is no plan, from either party, that credibly reverses this.

The Connection to Your Life: The government is just like you! In Item 9, we discussed that American households are borrowing on credit cards at 22% to cover the gap between their paychecks and their bills. The federal government is doing the same thing — borrowing to cover the gap between its revenue and its spending. The difference is that when a household maxes out its credit cards, it goes bankrupt. When the government does it, it doesn’t go bankrupt — it makes your borrowing more expensive (Congratulations!), it makes your government less capable, and it passes the bill to your children in the form of higher taxes, reduced services, or both.

The Accountability Lens: The current administration has two competing fiscal stories, and they cannot both be true simultaneously.

First, the DOGE Story: The Department of Government Efficiency claims roughly $150 billion in savings through contract terminations, lease cancellations, and workforce reductions. Independent analyses — from NPR, AEI, and the Committee for a Responsible Federal Budget — have found these figures consistently overstated, with actual verified savings likely closer to $10-55 billion, depending on the methodology and time horizon. Even taking DOGE’s own numbers at face value, they represent roughly four cents of savings for every dollar the government spent in the first four months of FY 2026.

Second, The Legislative Story: Trump’s One Big Beautiful Bill Act: The Congressional Budget Office (CBO) estimates that the One Big Beautiful Bill Act (OBBBA) will add $4.1 trillion to federal deficits over the next decade (2025–2034). That’s going in the wrong direction, but wait, there’s more. The bill is likely to cost even more than projected because it is designed with mechanisms that will be politically unpopular when they hit and which a future Congress will “fix.” This will increase the fiscal problem further. (What do I mean? Footnote!)¹⁹

The Growth Bet: The White House Council of Economic Advisers (CEA) justifies this cost by declaring that a combination of deregulation, tariff revenue, and tax incentives will spark an economic boom, driving 4% annual Real GDP growth through 2028. The CEA argues the bill actually pays for itself and eventually reduces the debt-to-GDP ratio.

• Most non-partisan forecasters remain skeptical of the 4% target. The CBO projects a more modest growth rate of 2.2% in 2026, falling to 1.8% in 2027 and 2028 as benefit of the tax cuts wears off. The Federal Reserve is even more conservative, projecting growth will stabilize around 2.0% in 2027 and 1.9% in 2028.

The Arithmetic: You cannot cut $150 billion (at the most generous estimate) while adding $4.1 trillion and call the result fiscal discipline.

The deficit connects to nearly everything else here. Government borrowing affects interest rates (Item 11), which affect mortgage costs (Item 4’s Big Three), which affect consumer debt (Item 9), which affects the spending that drives GDP (Item 1). A country borrowing $7 billion a day to sustain its current operations is a country whose “Engine” is partially running on credit — the same problem households face in Item 9, just at a national scale.

11. The Interest Rate Environment

This isn’t a single number but a chain of linked rates that together determine the cost of borrowing money in America — for the government, for businesses, and for you. When rates are low, money is cheap: businesses borrow to build, consumers borrow to buy homes and cars, and economic activity accelerates — but prices can accelerate too. When rates are high, money is expensive: borrowing slows, spending cools, and inflation comes down — but so do hiring, investment, and growth. The entire art of monetary policy is trying to find the setting where the economy grows without overheating. Right now, the Fed isn’t sure it’s found it.

The Key Rates (as of February 20, 2026):

• We mostly hear about the Federal Funds Rate, which is currently at 3.5%–3.75%. This is what banks charge each other for overnight loans, set by the Federal Reserve, that in turn affects what banks can lend to consumers (auto loans, HELOCs) and small businesses (inventory lines of credit). If the rate is too high, it costs too much for a local shop to finance new equipment; GDP and wages stay low. If rates are low, activity increases, but if they drop too fast, inflation can re-ignite, eating up any wage gains.

• The 10-Year Treasury Yield: 4.08%. is what it costs the U.S. government to borrow money for a decade, and it’s the benchmark that most directly affects your mortgage rate. It has come down modestly from its late-2025 highs. But if purchasers think that Donald Trump is pressuring the Fed into making political and not economic decisions, they will demand a higher premium to lend to the United States, which would push long-term rates up regardless of what the Fed does to short-term rates.

• 30-Year Fixed Mortgage Rate: Freddie Mac now has the 30‑year fixed at 5.98 percent, the first sub‑6 reading since September 2022, down from 6.85% a year ago. This is the rate that connects directly to the Housing line in your Big Three (Item 4). While 6% is better than 7%, it is still double the pandemic-era lows, keeping many would-be buyers locked out.

• Average Credit Card APR: 22.3%. It has barely budged despite the Fed’s three rate cuts. Credit card issuers are notoriously slow to pass savings to you, and with rising delinquencies, they have a built-in excuse to keep rates high.

The Accountability Lens: The administration’s plan to add $4.1 trillion in debt relies on interest rates staying low enough to make that debt “affordable.” If the Fed is forced to keep rates at 3.75% to fight the inflation caused by tariffs—or if the 10-Year Yield spikes because investors lose trust in the Fed’s independence—the interest on our national debt will become the largest single item in the budget.

12. Consumer Sentiment: The Perception Gap

The University of Michigan Consumer Sentiment Index surveys Americans monthly on how they feel about their personal finances and the economy. In a country where 70% of GDP comes from household spending, these feelings are a leading indicator of whether the “Engine” (Item 1) stays running or stalls.

• Current Level: 56.6 (February 2026, final). This is effectively a “Recession Signal.” A score of 56.6 sits in the 3rd percentile of the index’s nearly 50-year history. It is lower than the sentiment at the start of all six U.S. recessions since 1978 and is 33% below its long-term average of 84.

• What the data suggests: * The Inflation Lag: While general inflation has cooled to 2.4%, 46% of consumers spontaneously mentioned that high prices are eroding their personal finances—a share that has exceeded 40% for seven consecutive months. They may be feeling the Big Three, regardless of what the CPI is.²⁰ Also, Consumers aren’t reacting to the rate of inflation; they are reacting to the price level. Your grocery bill didn’t come back down — it just stopped climbing as fast.

• The K-Shaped Divergence: The February survey revealed a stark divide. Sentiment among households with large stock portfolios (the top third) rose to 68.3, while sentiment among non-stockholders declined to 46.7.

  • The Gap: This 21.6-point gap is historically large. It mirrors the “K-shaped” distress in the Consumer Debt data (Item 9): wealth is concentrated at the top, while the bottom half—the people whose “living standards are being eroded”—report an outlook that matches the darkest months of the 1980s and 2008.

    • The March survey sharpened the picture further. Respondents interviewed before the Iran attack on February 28 showed modest improvement from February. Those surveyed in the nine days after completely erased those gains. The index that was already in the 3rd percentile of its nearly 50-year history is now being pulled lower in real time — not by economic data but by a war.

The Accountability Lens: The “Perception Gap” is the administration’s biggest hurdle. If they point to the Dow 50,000 (Item 3) as proof of a “Golden Era,” they are speaking only to the minority of Americans whose sentiment is actually rising.

For the non-stockholder—whose sentiment is in the “basement” at 46.7—the economy isn’t booming; it’s a daily worry about the Big Three (Item 4). Until those prices come down or wages grow fast enough to bridge the 21.6-point gap, the “Golden Era” will remain a marketing claim that feels like an insult to a huge portion of the electorate.

1. In its original conception, the State of the Union was an intelligence report. The president was supposed to use his perch to deliver a clean national view to Congress because its members necessarily couldn’t see the whole picture.

The speech is a mess now. The branch that once embraced the deference shown to it by presidents, is full of people clapping mindlessly for the president. But what if, in the spirit of the original purpose, you tried to figure out the actual State of the Union. It is not easy! Where do you start, what do you include? How broad is your measurement? You could spend a lifetime.

I took a partial look at the economic State of the Union. Below is a list of economic measurements. I made a start at explaining what they do or don’t tell us about the economy. The picture that emerges isn’t boom or bust so much as an expansion going in two directions (so-called K‑shaped): balance sheets and portfolios up top, credit cards and rent hikes at the bottom.

The document is dense, provisional, clogged in places, the order is not quite right, and it’s not made for TV attention spans (Born salesman!) Still, I hope the work is of some use. I’ll keep tweaking and updating it.

2. The “euro area” (often called the eurozone) is the group of European Union countries that have adopted the euro as their official currency and share a common monetary policy under the European Central Bank (The ECB!) As of early 2026, the euro area consists of 21 of the 27 EU member states: Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

3. Massive property developers like Evergrande built way too much, borrowed way too much, and then couldn't pay their debts. Housing prices fell, construction slowed, and because real estate was such a huge part of China's economy — something like a quarter to a third of GDP — the whole thing is still dragging on growth years later.

• Scott Bessent (Treasury): Recently projected 3% Real GDP growth as a baseline.

• Speaking from Davos on January 21, 2026, Lutnick told Fox Business, “This quarter—the first quarter of 2026—the United States of America’s $30 trillion economy will exceed 5% growth.”

• In December 2025, Hassett told Fox Business: “3% [growth] would disappoint me. It could easily be a full percentage point higher [4%].”

• During his 2024 campaign and into early 2025, Trump repeatedly promised that his mix of tariffs and tax cuts would spark an “economic boom the likes of which we’ve never seen,” often citing 4%, 5%, or even 6% as the “natural” growth rate of a Trump-led economy.

4.

• The One Big Beautiful Bill Act (Item 10) made its tax cuts retroactive to 2025 while the administration delayed updating paycheck withholding — so instead of a small bump in each paycheck over the course of the year, the benefit arrives as a lump sum in early 2026, just ahead of the midterms. It’s a one-time sugar hit on a political schedule, not a durable source of demand. And it’s not evenly distributed: roughly 70% of households get something, but the bottom fifth — the people most likely to spend every dollar they receive — get essentially nothing.

5.

6. You might have heard President Trump say that it affected GDP by two points, but that was a verifiable lie.

7. It comes from poker. Blue chips were the highest-denomination chips at the table. Sometime in the 1920s, a Dow Jones employee named Oliver Gingold reportedly borrowed the term to describe high-priced, high-quality stocks, and it stuck. Now it just means big, established, financially stable companies with long track records — the ones your grandfather would have told you were “safe” to invest in.

8. In financial writing, indices like the Dow and inflation are always “ticking” up and “ticking” down. I hate this cliché, and yet here I am imprisoned in it.

9. Price-weighted, meaning stocks with higher share prices have more influence regardless of the company's actual size — a quirk that can distort the picture.

10. PCE covers a broader set of goods and services than CPI, including things bought on households’ behalf (like employer‑paid health insurance), so it better captures total consumption. Its weights update more flexibly, allowing for substitution when people change what they buy as relative prices move (switching from beef to chicken, for example), whereas CPI is built on a more fixed “basket” of items that it evaluates. This seeks to make PCE less prone to overstate inflation when consumers are actively trading down, and its historical series can be revised in a consistent way, which policymakers like for studying trends. Over time PCE tends to run a few tenths below CPI (partly because it gives less weight to shelter and more to healthcare), so the Fed explicitly defined its 2 percent target in terms of PCE rather than CPI.

11. “Cost burdened” is a term the Department of Housing and Urban Development (HUD) uses. It means you’re spending more than 30% of your gross income on housing — rent or mortgage plus utilities. If you’re spending more than 50%, they call you “severely cost burdened.” Once housing or something else eats up more than roughly a third of your income, everything else starts getting squeezed — groceries, healthcare, saving for emergencies, your kid’s shoes. You’re not broke on paper, but you’re one car repair away from trouble. So maybe be nicer to that service worker, bus driver, human out in the world because they are stressed.

12. One Big Beautiful Bill Act (OBBBA)

13. Would you like to visit my “dark factory”? https://www.wsj.com/tech/ai/ai-robots-china-manufacturing-89ae1b42

14. It excludes food and energy because those prices swing around a lot month to month, often for reasons that have little to do with the underlying inflation trend (like a cold snap hitting crops or a temporary spike in oil prices). Economists and policymakers use “core” measures to strip out that noise so they can see whether broad, slow‑moving price pressures are building across the rest of the economy.

15. This started life as economist Arthur Okun’s back‑of‑the‑envelope “discomfort index.” It was later famously brandished by Jimmy Carter against Gerald Ford and subsequently by Ronald Reagan against Carter.

• This sentence is better because “paychecks” are closer to “workers.” You want to start the clause with the thing that most directly links with the subject of the previous clause. (That is the whole engine of this project. Start with the thing closest to the person, then move outward.) Prices didn’t do that. And “eroding paychecks” It’s fancy writing without conveying anything. What we want to know is how is the information you’re telling me related to the way people live their lives? in this case, can they buy what they need? Eroding a paycheck is abstract. Being able to pay for what you need is something people understand. They all know what they need.

16.

• I’m not weighing in on the idea of meaning at work, which I think has changed since the pandemic. This matters politically because while the numbers might suggest people are relatively okay with working in their jobs, the increased expectation in what it means to have a job you find meaningful might make the pain of staying in a “meh” job higher and that leads to possible greater economic/political angst.

17.

18. I confess that if I were better at doing this, I would be able to land the enormity of this number. But I haven’t been able to find a way to do it yet.

• The bill is designed with costs that hit immediately (in the form of tax cuts, for example) and savings that phase in later— meaning the savings may or may not take place. The Committee for a Responsible Federal Budget (CRFB) notes that the deficit impact peaks at $635 billion in 2027—representing about 2.0% of GDP—before supposedly declining as temporary tax provisions expire and spending cuts to Medicaid and SNAP take hold. Maybe, but the temporary tax provisions create political constituencies that will fight to extend them, and the Medicaid/SNAP cuts will face legislative resistance as they start to bite real people. The tax cuts were deliberately made retroactive to 2025 and the administration deliberately delayed updating paycheck withholding formulas. The result: instead of seeing an extra $20 per paycheck throughout the year, taxpayers will receive lump-sum refunds averaging $1,000 more than last year — arriving in bank accounts ahead of the 2026 midterms. The Treasury Department projects roughly $100 billion in additional refunds this filing season. But the benefits are distributed through deductions, not credits, which means almost no one in the bottom 20% of households will see anything. Seventy percent of households get something; the bottom fifth gets essentially nothing. The costs, meanwhile, are spread across a decade.

19.

20. CPI: The Consumer Price Index, the standard measure of inflation.