America’s Economy Looks Fine on the Surface — But Trouble’s Brewing Underneath
What do men’s underwear, cardboard boxes, and Hamburger Helper have in common? At first glance, not much, but together they’re quirky yet telling markers of how households adjust when money gets tight — underwear sales dip, fewer boxes move through warehouses, and cheaper meals fill carts. Together, they signal an economy starting to crack under pressure.
The bill’s coming due: On the surface, the outlook appears bright as the Organization for Economic Co-operation and Development (OECD) just raised its 2025 US growth forecast to 1.8%, crediting stronger-than-expected resilience in the first half of the year. But much of that strength came from companies rushing goods across the border before tariffs hit — a temporary lift that made the economy look healthier than it is.
With tariffs now estimated at 19.5% — the highest since 1933 — businesses have cushioned the blow by cutting into margins and burning through stockpiles. However, that buffer is about to run out, becoming “increasingly visible in spending choices, labor markets, and consumer prices.”
- A Yale survey of 70 CEOs revealed that 71% say tariffs are already hurting their operations, though Axios notes they’re staying quiet publicly for fear of White House retribution.
- Meanwhile, wealthy Americans now drive nearly half of consumer spending, with the top 10% currently accounting for 49.2% of spending — the highest proportion since 1989.
Mounting Strain, Eroding Hope
It’s not just the numbers throwing caution. JPMorgan’s Jamie Dimon says the economy is “weakening,” and Citigroup’s CFO warns of “slowing growth” through 2026. Those concerns are already visible in credit markets, with subprime auto loan delinquencies climbing to 9.3% and triggering the collapse of lender Tricolor, which left 100K customers stranded. And now, central bankers and seasoned investors are adding their voices:
- Fed Chair Jerome Powell told executives the economy faces a “challenging situation,” with pressures on both inflation and jobs, warning “two-sided risks mean there is no risk-free path.”
- Mark Spitznagel, who made $1B in the 2015 “Flash Crash,” says today’s setup reminds him of 1929, noting, “The markets are perverse. They exist to screw people.”
Optimism on edge: Goldman Sachs strategist Tony Pasquariello told clients to be “responsibly bullish,” which is another way of saying buy stocks but don’t get carried away. History gives that view some weight — each time the Fed has cut rates with markets already near record highs, the S&P 500 has risen in nine out of ten cases over the following year. Still, investors hoping for a smooth ride may find the turns sharper than expected.