Economy

Washington D.C. – A growing disconnect between macroeconomic indicators and the lived financial experiences of many Americans is fueling debate over the state of the U.S. Economy, a phenomenon some observers are calling a “boomcession.” The term, coined by American Economic Liberties Project Director of Research Matt Stoller, describes a situation where economic performance appears strong – with rising stock markets and sustained consumer spending – while a significant portion of the population feels financially strained.

The apparent paradox stems from unevenly distributed economic gains and the persistent impact of inflation, which disproportionately affects lower-income households. While the U.S. Economy grew by 4.3% in the third quarter of 2025, exceeding expectations, this growth isn’t being felt equally. A recent survey revealed that nearly three-fifths of Americans believe the country is already in a recession, despite the positive GDP figures.

Inflation remains a key driver of this disparity. Data from Morgan Stanley indicates that food and housing costs have seen the most significant increases between 2020 and 2025, and these categories represent a larger share of spending for lower-income families. Economist Heather Berger of Morgan Stanley notes that lower-income households have historically experienced higher rates of inflation than wealthier groups, a gap that has widened as inflation has remained above The Federal Reserve’s 2% target.

The financial pressures are reflected in record household debt levels. Federal Reserve data shows that credit card debt reached a record high of $1.28 trillion in the fourth quarter of last year, indicating that many families are relying on credit to cover basic expenses. This vulnerability contrasts sharply with the earlier stages of the post-pandemic recovery, when stimulus measures provided a financial cushion for many households.

The labor market presents a similarly complex picture. Economists have described the current situation as a “jobless boom” or “hiring recession,” characterized by low levels of both job openings and layoffs. In December 2025, the number of job openings in the U.S. Fell to 6,542, the lowest level since 2020. However, this apparent stability hasn’t translated into widespread wage gains, and the benefits of the stock market rally are largely concentrated among those who own assets.

Productivity has reached record highs, but concerns are growing that advancements in artificial intelligence (AI) could lead to job displacement. The share of economic output flowing to workers through compensation has declined to a new low, while the gap between corporate profits and wages as a percentage of Gross Domestic Product continues to widen. The University of Michigan’s consumer sentiment survey is near its lowest point in history.

Despite the prevailing pessimism, consumer spending remains relatively robust, driven largely by the top 20% of income earners, according to an analysis by Moody’s. January 2026’s nonfarm payroll report exceeded expectations, signaling some stabilization in the labor market, but the gains were heavily concentrated in the healthcare sector.

A Snap Finance survey conducted in December 2025 highlighted the financial strain on lower-income households. Approximately one-quarter of respondents reported that their financial situation was unstable or very unstable. This figure rose to 41% for those with credit scores below 670 and 54% for households earning less than $50,000 annually.

President Trump has responded to the economic anxieties by promoting initiatives aimed at lowering the costs of housing and prescription drugs. He recently stated that inflation was “almost nonexistent” in January, a claim that contradicts recent data showing inflation remains above the Federal Reserve’s preferred 2% level. Economists and investors are now awaiting details on how aggressively these affordability policies will be pursued in the lead-up to the November midterm elections.