Observing the U.S. economy in the spring of 2026 is almost unsettling. While cable news shows grainy footage of tankers stalled near the Strait of Hormuz, gas stations nationwide are posting prices that haven’t been seen since the early days of the pandemic, and the most recent GDP figure came in at a perfectly respectable 2 percent. not flourishing. not crumbling. Just obstinately, almost defiantly, okay.
When the Commerce Department’s first-quarter report was made public at the end of April, it revealed a narrative that most economists had not anticipated. Growth had surged to a much healthier pace from a drowsy 0.5 percent the previous quarter, when a six-week government shutdown depleted the atmosphere. Spending by the government increased by 4.4%. The nation’s main source of concern, consumers, continued to make purchases. You have to read it twice because of the type of number.
A portion of the explanation is nearly unremarkable. This year’s average tax refund is about $330 more than last year’s, and money moves quickly, especially through lower- and middle-class households, where refund checks are rarely saved. In a straightforward statement, Mark Zandi of Moody’s Analytics described the refunds as “really critical, particularly in March.” It was easy to understand what he meant when you saw people waiting in line at big-box electronics stores and Walmart parking lots in late February.
But it’s more difficult to identify the deeper story. By now, more harm should have been done by the war with Iran, which is well into its second phase after Tehran successfully blocked the Strait of Hormuz, a route that typically carries about a fifth of the world’s energy. The shock is genuine. Trucking companies are being bitten by diesel. Fuel hedges are being quietly rewritten by airlines. Input costs are rising in ways that Midwest small manufacturers—the kind that run on margins thin enough to slice deli meat—cannot readily pass on. The topline figures remain unchanged.
The majority of the disagreement resides in that space between the big picture and the complaints at the local level. The Trump administration has been quick to point to Wall Street’s success this year as proof of its aggressive foreign policy and tariff strategy. It’s true that the stock market is flourishing. The data doesn’t really reveal whether that boom represents widespread American prosperity or just a small increase concentrated in the portfolios of the already wealthy. The majority of the gains are in the same locations.
The phrase “precariously perched” from Zandi keeps coming up. It’s a practical one. For the past year, job growth has fluctuated between expansion and contraction, largely due to hiring in the health care industry. The nation has been losing jobs when that industry is eliminated. Although there hasn’t been a wave of mass layoffs yet, many businesses are on the verge of one. It wouldn’t require much. The pump experienced another spike. another shock to the supply. A nasty headline from the Gulf.
Claudia Sahm, who is quite skilled at identifying recessions, made a somewhat more upbeat statement. She believes that the economy had more momentum after the pandemic than most people realized, and that momentum is still helping it get through the current crisis. It remains to be seen if it continues into the next one.
It’s difficult to ignore how much of this resilience depends on the current state of affairs not getting worse. Midway through 2026, the U.S. economy resembles a tightrope walker rather than a fortress; it is remarkably stable, but only if the wind doesn’t pick up.
