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Posted on 12/25/2025 12:11:03 PM PST by SeekAndFind
Data this week showed that the American economy is growing at its fastest pace in two years — and yet polling shows the mood on Main Street is grim.
It’s almost hard to believe we’re talking about the same economy. But the metrics offer another reminder that two seemingly diverging trends can simultaneously be true. An economy that’s growing rapidly doesn’t necessarily mean everyone is feeling it.
Yes, gross domestic product, the broadest measure of the US economy, heated up this summer to a sizzling annualized pace of 4.3%, far outpacing economists’ expectations.
But the booming GDP did not translate to a hiring boom, nor was it accompanied by a return to normal inflation.
“GDP is an abstract concept. But people know jobs. They know they can’t find a job if they lose theirs,” Moody’s Analytics chief economist Mark Zandi told CNN in a phone interview on Tuesday. “And they know they are paying more for coffee, beef, electricity, child care and just about everything else.”
GDP is a kind of report card for the economy. But like any report card, it may not paint a full picture of what is happening.
For example, one of the biggest reasons GDP accelerated in the third quarter is that consumer spending heated up. This has been a recurring theme under both the Biden and Trump administrations: Resilient consumer spending in the face of a laundry list of economic headwinds.
However, the report doesn’t explain which consumers ramped up spending.
Economists say the third-quarter spending increase was likely driven by higher-income consumers, the ones benefiting the most from record-high real estate values and blockbuster stock returns.
Many lower- and middle-income Americans, on the other hand, are struggling to stay afloat. Some of them are cutting back on spending and falling behind on bills.
“Retirees and the top 10% continue to drive the economy. It’s still very much a K-shaped economy,” said Mike Reid, senior US economist at RBC Capital Markets.
While people may not feel high GDP, they do feel high prices.
Inflation hasn’t gone through the roof this year, as some feared it would because of President Donald Trump’s sweeping tariffs.
But inflation also hasn’t improved much since Trump took office in January, when prices were rising at a 3% annual rate compared to November’s 2.7% rate (according to government data that carries a lot of fine print because of shutdown-related distortions). Still, it’s higher than the 1.7% average annual inflation rate Americans experienced in the decade preceding the onset of the pandemic, according to Bureau of Labor Statistics data.
Prices on some essentials have gone down. For instance, eggs in November were 13% cheaper than a year earlier, according to the BLS. Milk was 1% cheaper.
Gasoline has been under control all year, with the national average falling in recent days to $2.86 per gallon, a fresh four-and-a-half-year low. That’s a far cry from $5-a-gallon gas in 2022 after Russia invaded Ukraine.
However, other essentials have gone up in price.
Consumers are paying on average 7% more for electricity, a hot topic during the November governor races in New Jersey and Virginia.
Natural gas, the most common way to heat homes in America, is 9% more expensive.
Ground beef surged 15% year-over-year in November, the biggest increase since 2020. And consumers are shelling out a lot more for car repair (10%) and coffee (19%), according to the BLS.
It’s true that paychecks are also up – but often not by enough to keep up with the cost of living.
Consider that Bank of America deposit data shows that paychecks beat prices in November only for high-income households. Middle-income household wage growth was just 2.3%, while lower-income households inched up by only 1.4%.
If the US economy were truly booming, consumers wouldn’t be worried about job security. That’s not what we’re seeing today.
The share of consumers who believe job openings will be more plentiful over the next six months fell to the lowest level in four years, according to consumer confidence figures The Conference Board published Tuesday. The share of consumers who believe it’s harder to get a job also rose.
It comes as the unemployment rate hit a four-year high of 4.6% last month, up from 4% in January. Earlier this year the number of job seekers exceeded the number of jobs available for the first time in four years.
That’s driving consumers to be more downbeat about the economy, the overarching consumer confidence data showed.
One reason hiring has slowed is because businesses are learning how to do more with fewer workers, thanks to advancements in artificial intelligence. At the same time, Trump’s erratic trade policy changes have left many businesses in a state of paralysis. With little certainty about his next tariff moves, many have paused hiring plans. Additionally, some businesses have resorted to staffing reductions to avoid having to pass along heftier price increases from tariffs to consumers.
Bottom line: GDP, no matter how high, won’t make Americans feel better about this economy. Paychecks that stretch further, more certainty about what lies ahead and better job security will.
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AFFORDABILITY will be the buzz word in the mid term elections and the Democrats will exploit the word and “income inequality” to the fullest extent. Whether they succeed to take over Congress remains to be seen.
One of the most important, and controversial, realities of the current expansion is that it is *not evenly distributed*.
The most vigorous spending in 2025 has come from the wealthiest Americans. The top 10 percent of earners now account for nearly half of all U.S. consumer spending, a structural shift that has been building for years but is now unmistakable.
This trend explains why consumer sentiment surveys paint such a bleak picture while retail sales and services spending remain strong.
High income households benefited disproportionately from the stock market’s record-breaking gains earlier this year. Rising asset values helped offset inflation fatigue and gave affluent consumers the confidence to keep spending.
Examples of this divergence are everywhere.
Airlines have doubled down on premium travel. Airport lounges are being expanded and upgraded. International routes and business class seats are selling well, even as domestic economy ticket sales soften.
Luxury retailers report that high-end shoppers are a major source of holiday spending, even as lower income consumers pull back.
This pattern matters for investors because it explains why certain sectors continue to thrive while others struggle. Businesses catering to affluent consumers are seeing far more resilience than those reliant on price-sensitive households.
Approximate Contribution to Q3 2025 GDP Growth
One of the most concerning aspects of the current expansion is the labor market.
While GDP continues to grow, job creation has slowed. Some economists describe the situation as a jobless expansion, where output rises without broad-based employment gains.
| Growth Driver | Estimated Share of Growth |
|---|---|
| High income consumer spending | ~45% |
| AI and data center investment | ~25% |
| Other business investment | ~15% |
| Government and net exports | ~15% |
This breakdown highlights the concentration of growth. Two drivers account for roughly 70 percent of expansion, leaving the economy vulnerable if either weakens.
One of the most concerning aspects of the current expansion is the labor market.
While GDP continues to grow, job creation has slowed. Some economists describe the situation as a jobless expansion, where output rises without broad-based employment gains.
A weaker job market undermines consumer confidence and limits wage growth, especially for lower income households who are already under pressure from inflation.
“Why do so many Americans dislike ....” ..anything that is good, moral or positive if such reflects favorably upon conservatives. As in, POTUS Trump is a competent leader. That fact alone makes liberals even more insane than they already are.
“Affordability”? How about “The Gutting of the Middle Class”?
Whether they succeed to take over Congress remains to be seen.
It’s all but a given if the republican congress continues to do nothing
Oh how blind those are who refuse to see. The biggest change that will increase the average family's income and job security, is removing the millions of illegals who drive down wages at the low end of the job market. Plus removing their demand for food, housing and consumer products will cause lower prices due to competition. President Trump started on making this change a year ago, but liberals fought him every inch of the way.
We are finally beginning to make progress here. I pray the results will show up soon, in time to make a difference before mid-term elections.
100% agree. Cleaning up the fraudulent use of tax payer money will help a lot too.
Over 93% of ‘journalists’ are liberal and probably 98% of professional ad agency staff and workers. Those groups have power.
Almost all newspaper stories are negatives about Trump and MAGA and Republicans in general...
What’s amazing is that anyone supports us or sees the truth about what’s happening.
The plant I retired from has no work. They mainly do work for car manufacturers.
LACK OF EDUCATION ON THE TOPIC IS RAMPANT
All through the Biden years...things went up and up and up. Ridiculous things happened...like baby formula shortages....eggs at $8 a dozen.
Of course we know ABSOLUTELY, that the killing of millions of chicks...unnecessarily...caused the egg shortage.
We know that the baby formula shortages...after an early problem...was driven by all kinds of mechanisms...hoarding, WIC etc...to the point where the formula was not getting to our shelves.
Eggs are $1.97 at Target...Baby formula is readily available...Every child now gets 2 out of 3 crappy meals at school...and throughout the summer.
When does affordability come into the picture.
If you want something and you can't afford it...you don't buy it. That's life.
I feel much the same way you do.
I read an article yesterday that discussed that the improving economy is regional. In blue states with still high gasoline prices, inflation is higher and more prevalent than in red states with lower gas prices and fewer regulations on businesses.
Under the Biden-error, democrats insisted the economy was great; and it was for them. They had USAID funds flowing into their coffers. Government workers were making money hand over fist and their Section 8 voters were getting Covid funds to supplement their usual tax-payer dollars. It was the working class/lower middle class who were bearing the burden of the Biden inflation.
The reduction of illegal totals will likely do the things you mention — lower demand for food and lower prices, etc.
But also lower demand for other things, like cars, and yes, price may fall, but so will production. No point in building them if there is no one to buy them. In a broad sense, what is good about declining population?
As for GDP, let’s not forget Govt Spending is in that equation and we are making ZERO progress on the deficit outside tariff revenues. Which are not much of a % of those deficits. And lets not forget the whole point of tariff revenue is that it goes away because production returns to the US. Production jobs to be filled by a declining population.
No free lunches. Everything has a trade off.
I think AI has a lot to offer, but not at the cost of our natural places. It should be allowed to grow organically.
RE: When does affordability come into the picture.
Housing ( rent and mortgages take up a huge percentage of income)
Insurance ( unlike steak or coffee, you can’t do away with home or car insurance).
Health care premiums ( you can’t guarantee you won’t get sick)
College Tuition and paying back loans.
Outside of the way wacky woke sanctuary cities and States, regular people are living/experiencing the beginnings of lower regulations, lower energy prices. The democRATS and DemoKKKrats cannot hide the everyday gasoline price people pay at the pump. That lower fuel price reverberates throughout the economy, and even overseas. President Trump has restored the export levels of Liquid Natural Gas (LNG) that the Hussein/Biden Regime limited.
They used to say that those everyday people do not show up to protest, march, etc. There is one place where hundreds of thousands do show up. President Trump rallies. No matter how large the rally venue, there are thousands more outside the venue. Like minded individuals who have flocked to the man who said something very close to: “They are coming for you. I am just in their way.”
Drill Baby Drill works every time.
AI “creates jobs” while it “ends jobs” and that equation has to be solved. I remember when everyone was going to be out of work due to PCs, but really it just meant an adjustment period. If we had an education system instead a political/amoral indoctrination system the change would be easier to digest.
Those are norms and have been throughout the years.
My mortgage was 8% in the 1980s. And I put two boys through college...Syracuse and Clarkson in the 80s and paid my own healthcare. The children were covered by their father. I worked my arce off...and so did my boys. They took out loans and paid them back. They worked all summer.
Like I said...those are and will always be "norms".
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