The US expansion just marked its six‑year anniversary, and the odds still lean toward growth holding up in the near term. Yet the backdrop is anything but serene. Geopolitical flashpoints, economic crosscurrents, and a thicket of slow-burning risks continue to accumulate beneath the surface.
So how is the economy actually performing?
One useful lens is the “big four” indicators of the business cycle—, consumer spending, personal income, and industrial production—and how their current trajectories stack up against the historical record since 1970. Together, they offer an insightful read on whether the expansion’s momentum is fading, firming, or simply treading water.
Let’s start with the labor market: the recovery in payrolls since the brief but dramatically sharp pandemic recession ended in April 2020 has been an upside outlier by historical standards. A key driver for the rebound is the snapback from unprecedented speed and depth of the loss when the economy effectively shut down during the early phase of the Covid‑19 shock.
But as the chart highlights, the growth rate has slowed as the expansion ages. That’s unsurprising at this late stage of the recovery. After 75 months of expansion, the pace is naturally settling into a more mature phase of the cycle, which suggests that the labor market’s contribution to economic growth will continue to ease.
Consumer spending’s trend is stronger, which is somewhat surprising for several reasons. The macro shocks over the past couple of years—tariffs and Middle East conflict—looked like textbook threats to . But supported by a resilient labor market, the appetite to consume has remained robust, despite one measure of consumer sentiment reflecting some of the weakest polling on record in recent months.
The solid growth trend in consumer spending is all the more striking when viewed alongside the relatively weak recovery in personal income since the pandemic ended. Income surged early in the pandemic thanks to the government’s Covid‑related stimulus, but the path since then has been one of the weakest—and at times the weakest—runs during economic expansions in half a century.
Finally, industrial output has been strikingly lackluster over the past several years. There are hints that activity in this sector is strengthening lately, but the flatlining that has prevailed for much of the time since the recovery began in early 2020 suggests a cautious outlook for industrial activity is still warranted.
The takeaway: the expansion is heavily reliant on consumer spending. That’s hardly surprising. The modern US economy has long run on the capacity of households to open their wallets. But hints that labor‑market growth has slowed while support from personal income and industrial activity remains weak suggest a degree of vulnerability for the economic outlook.
To be clear, a deeper analysis of current conditions points to low recession risk in the near term, based on this week’s edition of The US Business Cycle Risk Report. But with the Middle East crisis flaring again and oil prices rebounding, the economy’s heavy dependence on household demand makes the expansion look more fragile than the headline data suggests.