For economists, parsing today’s data is like trying to read a weather forecast through fog. The signals keep shifting — and even seasoned analysts can’t tell if the U.S. economy is cooling toward recession or warming into another expansion. “The data is unusually foggy,” former White House Council of Economic Advisers chairman Jason Furman wrote in The New York Times, adding that it could take years to know whether the nation is approaching a downturn or a boom.
The murkiness matters most in one crucial area: how long consumers can keep spending. Although Americans have continued to buy through the holidays, consumer sentiment has steadily declined since April 2024, according to University of Michigan data. That tension — people spending even as confidence ebbs — underscores how hard it is to gauge underlying strength.
“There’s so much mixed data coming in, candidly,” Will Auchincloss, who leads the Americas Retail Sector unit at EY-Parthenon, told The Washington Post. “It really is a mosaic more than a photograph right now.” With consumer spending accounting for roughly 69% of GDP, small shifts in behavior ripple through the economy.
So far, the overall picture looks stable on the surface. Mastercard and Visa reported that November and holiday-period spending rose about 4% year-over-year. Adjusted for inflation, though, Auchincloss told the Post the results were effectively flat — a clue that people are spending more dollars but not necessarily buying more goods.
That spending is also deeply uneven. A Moody’s Analytics review of Federal Reserve data earlier this year found that the top 10% of earners — households making at least $250,000 annually — now account for nearly half of all U.S. consumer spending, up from about 36% three decades ago.
At the same time, economic pressures have reshaped retail behavior. Tariffs and layoffs are pushing up costs and constraining growth, said Giacomo Santangelo, senior lecturer in economics at Fordham University. “Tariffs are raising inflation, no question,” he told GlobeSt.com. “Tariffs and other policies like the Doge layoffs have led to increases in unemployment.”
Discount retailers such as Walmart, TJX Companies, and Burlington Stores have not only managed to absorb additional tariff costs but also seen new customers from higher-income brackets looking to stretch their budgets. Still, the apparent resilience of spending is not without risk.
“It’s drawing sales ahead from the future because it’s being done on credit,” Santangelo said. “We’re pulling from our money in the future, so we should expect less spending in the future.” He added that high inventory levels could further slow demand, since excess stock reduces orders for new goods — a chain reaction that, he warned, could dampen growth well into 2029.
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