The Economy and the Tenuously Resilient Consumer

In the face of tariffs, spiking oil prices, and heightened uncertainty, the US economy has shown surprising resilience. Part of the reason for this is continued consumption spending, which accounts for about two-thirds of national spending. But in this K-shaped economy, consumption spending has differed across the income distribution – the top 20% has had consumption growth of 4% while consumption by the rest of the population has been flat. Mark Zandi argues that this shows a fragility in the economy, especially since one source of upper-income spending is the rise in the stock market which itself is narrowly concentrated among AI stocks. He warns of potential risks facing the economy and why consumption, while resilient to this point, is tenuous. Mark is the Chief Economist of Moody's Analytics.