The state of the union’s economy is surprisingly robust.
On paper, anyway. Jobs, wage progress, shopper spending and inflation underneath President Donald Trump look fairly first rate or have been largely secure and the inventory market is close to a file excessive.
Yet Americans despise this economy. Consumer confidence is close to file lows and recent polling exhibits Trump’s economy will get dreadful grades from potential voters – a political legal responsibility for Republicans forward of this 12 months’s midterms.
Why such negativity?
Affordability. It’s a time period Trump hates (and says he has defeated). But following the pandemic, costs surged throughout the Biden administration and shoppers haven’t but adjusted. Housing and little one care particularly are largely unavailable and unaffordable. And mortgage delinquencies, particularly for lower-income Americans, are beginning to get worrisome.
Trump on Tuesday evening is set to ship this 12 months’s State of the Union handle. Here’s a take a look at some of the financial indicators that seem robust, these which can be seemingly secure, and the ones which can be elevating purple flags.
Despite a latest tariff- and AI-induced sell-off this 12 months, shares stay close to their all-time highs. The market is decidedly not the economy, however enthusiasm from Wall Street helps pad retirement accounts, which may give shoppers the confidence to spend their cash.
The US economy grew 2.2% in 2025. Although that was the slowest tempo since 2020, it was very a lot in keeping with the final three years of strong financial progress. And the longest-ever authorities shutdown shaved a bunch of productiveness off the books in the fourth quarter – progress that the US economy ought to be making again this quarter.
The strong (however not on a sugar excessive) progress may preserve inflation in verify. The not-too-hot, not-too-cold progress led Stephanie Roth, chief economist at Wolfe Research, to name this economy “Goldilocks.”
The US labor market was historically weak final 12 months. Federal Reserve Governor Christopher Waller – one of Trump’s finalists for Fed chair – mentioned this week that he thinks jobs knowledge revisions will finally present 2025 was one of simply three years since World War II through which the US economy misplaced jobs.
So what’s “stable” about that? US job progress was significantly stronger than anticipated in January, the unemployment fee stays low, and the economy doesn’t truly must create that many roles because of historically low immigration and delivery charges. Economists consider the job market could also be on the path to restoration
The unhealthy information: Paycheck progress has been on a gentle slide for greater than three years. The excellent news: so has inflation, which is slowing at a sooner fee.
After a pair of bounce-backs in the previous two years, annual inflation (2.4%) seems to be on the downswing once more. That means annual wage progress (3.7%) is making our paychecks stretch farther on the complete. Still, the imbalance in the economy — also known as K-shaped — signifies that’s extra true for wealthier Americans than for low-income people.
Income and wealth inequality are usually not new issues for the US economy, however the hole between the haves and the have-nots widened this previous 12 months. While booming inventory costs – themselves bolstered by rampant funding in synthetic intelligence infrastructure – have elevated prosperity for high-wealth people.
For some lower- and middle-income Americans, nonetheless, the funds simply appear to get tighter, and burdens are rising. A rising share of American households are discovering it more and more tough to pay down bloated bank card payments, to maintain up with pricey car payments, to make scholar mortgage funds (deferred throughout the pandemic however now again in the combine), and to manage to pay for in the financial institution to cowl their month-to-month mortgage verify.
A troubling end result of that wealth divide: A rising quantity of Americans are more than three months late on their loans. Mortgage delinquencies particularly have shot up lately, and automotive mortgage delinquencies are round the place they had been throughout the Great Recession. Student loan delinquencies surged after the US authorities ended the cost pause in late 2024.
Overall, Trump’s financial file in his second time period seems to be set to be as a lot about the narrative because it is about the numbers.