Economic data is sending mixed signals — and no one is quite sure which version of reality to trust. Former White House Council of Economic Advisers chairman Jason Furman explored that uncertainty in a recent New York Times opinion piece, asking whether the U.S. is “sliding toward recession or entering a new boom.”
In the span of a week, the government reported rising unemployment and slowing job growth — findings that came without the Federal Reserve’s later acknowledgment that about 60,000 jobs per month had overstated employment figures. Around the same time, GDP data showed a brisk 4.3% annualized expansion. For Furman, the contrast captures the “unusually foggy” state of today’s economy, clouded by the normal challenges of measurement and worsened by reporting disruptions tied to the government shutdown.
Furman outlined three possible explanations. The first, and most pessimistic, is that the labor market data are correct and economic growth is overstated. While both GDP and jobs data are routinely revised, he noted that GDP figures tend to see larger corrections. When the two conflict, he added, the safer bet is often on the job numbers.
If that reading is correct, consumers — responsible for about 69% of GDP — may be pushing the economy forward through borrowing or by drawing on stock market gains. “Lower-income consumers [are] stretching their borrowing,” Furman wrote, while higher-income households are spending from “their newfound stock market wealth.” According to Moody’s, the top 10% of households account for nearly half of all consumer spending, a reliance that may mask the strain many families are feeling despite inflation-adjusted gains.
The more optimistic interpretation reverses that logic: GDP growth could be accurate, while the employment data may simply lag reality and later be revised upward. Furman said there is some evidence for this view, as private-sector job growth has remained, despite “sharp reductions in federal jobs have weighed down solid,” and total employment.
A third scenario strikes a middle ground — that both sets of data are accurate. Under this view, the economy is expanding rapidly, with minimal job gains, thanks to productivity gains, especially from artificial intelligence. Yet Furman cautioned that current evidence does not point to widespread job displacement from technology.
For now, clarity remains elusive. “It could take years before we know which of these explanations is correct — if we ever do at all,” Furman wrote. And in the meantime, reacting too quickly to this uncertain data carries its own risk. “Using the latest data to modestly update the views you use for business planning or conducting monetary policy creates the risk of falling behind the curve,” he said. “In this case, however, we don’t yet know which curve we would be falling behind.”
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