After a chaotic year marked by trade wars, wild market swings and the longest government shutdown in history, the U.S. economy has once again proven more resilient than many analysts feared.
But “resilient” is not exactly the same thing as “good.”
Many Americans are entering 2026 worried about their jobs, under financial pressure and unconvinced that things will improve in the new year.
The release of official economic data resumed last week, after a prolonged delay caused by the shutdown. The reports were skewed by technical problems related to the strike, but overall they indicated that the economy remains stuck in the same uncomfortable bind it was in before the statistical breakdown.
Job growth was reasonable in November, but unemployment increased. Retail sales have been strong, but wage growth has lost momentum. Inflation has slowed, but remains high.
This mixed picture is much better than previous gloomy forecasts, when many economists warned that tariffs imposed by President Donald Trump would lead to high inflation, a recession or both.
Instead, data due this week is expected to show that GDP (Gross Domestic Product) grew at a robust pace in the third quarter. The year’s consolidated figures, due to be released in early 2026, will likely show real expansion of around 1.5% in 2025, below 2024, but far from characterizing a recession.
But progressive deterioration remains deterioration. In surveys, Americans overwhelmingly say they are suffering from the cost of living and don’t believe the economy works in their favor — a perception borne out by data showing that consumption is driven by a relatively small group of wealthy families.
Trump attempted to change that narrative in a combative — and often misleading — speech during a prime-time statement in which he blamed his predecessor for economic woes and promised that a “golden age” was near.
Many analysts in fact expect a more favorable scenario next year. The problem for Trump is that few of the major economic drags that turned voters away from Democrats in 2024 have improved, and some have gotten worse.
The tariffs did not cause a general rise in inflation, but they did raise the prices of some consumer products. Owning a home remains out of reach for many Americans. Child care costs remain excessive, electricity bills are rising and health insurance premiums are expected to rise for millions of families as subsidies end at the end of the year.
“When Americans think about the economy, they ask themselves, ‘Can I afford what I need and want?’ Do I have economic opportunities? “, explains Heather Boushey, who served as economic adviser to President Joe Biden.
When the answer to those questions is “no,” she said, it’s hard to convince people that the economy is doing well, a lesson she and her colleagues in the Biden administration learned the hard way.
AN UNEVEN IMAGE
Despite Trump’s claim that he “inherited a disaster,” the economy upon his return to the White House was strong in many respects. Unemployment was low. Wages have increased. Inflation, although above normal, had fallen sharply since peaking in 2022.
The new government’s frenetic first months threatened to derail that progress. Trump’s intermittent threats of tariffs, coupled with Elon Musk’s efforts to eliminate programs and reduce federal employment, have led to sharp declines in consumer confidence and wild market swings.
On April 2, Trump announced tariffs against almost all of the United States’ trading partners. Markets plunged and economists warned of the risk of recession or “stagflation” – the feared combination of high inflation and low growth last seen in the 1970s.
The worst predictions failed to materialize, in part because Trump reversed course, canceling some tariffs and postponing others. This gave companies time to replenish their inventories and rethink their supply chains. Businesses have also been more reluctant to pass on price increases to consumers than many economists expected, perhaps because they doubt customers’ willingness to bear the extra cost.
The U.S. economy also revealed unexpected sources of strength that helped offset the effects of the trade war. The boom in data center construction for artificial intelligence models has supported business investment, while the booming market, also linked mainly to optimism about AI, has boosted consumption.
“Without the surge in AI spending, we would be in a different situation,” said Michael Strain, an economist at the American Enterprise Institute, a conservative think tank.
However, the benefits were not distributed equally. Wealthier families have absorbed the bulk of the stock market’s gains, while a weakening labor market has slowed wage growth, particularly among lower-income workers.
As a result, consumption has become divided: high-income families continue to spend, while low-income families become increasingly delinquent. “Yes, there are people who are doing very well, but it doesn’t feel like the tide is rising and lifting all boats,” says Michael Madowitz, an economist at the progressive Roosevelt Institute.
CAREFUL OPTIMISM
Despite these concerns, many analysts expect growth to pick up again next year and the job market to improve rather than deteriorate further.
They point to several possible sources of dynamics. Tax cuts approved by Congress this year are expected to result in larger refunds for many Americans, which could boost consumption early in the year. The law also provided incentives for business investment.
Lower interest rates, the result of a series of reductions promoted by the Federal Reserve (the US central bank), should also help businesses and consumers. Authorities are considering further reductions over the next year.
But perhaps the biggest relief comes from easing uncertainty after an exceptionally turbulent year, in which businesses and investors faced seismic shifts related to tariffs, immigration and regulation.
“The year 2025 has been held back by all the public policy uncertainties,” says Stephen Stanley, chief U.S. economist at Banco Santander. “The policy environment will allow businesses to re-engage, and when that happens, I think we will see a resumption of investment. »
This more favorable scenario, however, could reverse if the AI boom loses momentum and drags the market down, or if the quieter year many expect fails to materialize, whether due to new tariffs or other policy changes.
Even without a new shock, the progressive deterioration is likely to continue. Veronica Clark, an economist at Citigroup, predicts that weak monthly job growth and more modest wage increases will finally start to weigh on consumption next year. Higher unemployment should offset the benefits of larger tax refunds, she said.
“If the job market really weakens, then these other factors almost don’t matter,” Clark says.
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