Strip out the headlines. Ignore the stock market charts. Forget the talking points. The American economy is flashing stress signals everywhere you look.

by

The U.S. economy is showing signs of strain that official headlines aren’t capturing. Despite stock market gains, underlying indicators suggest a slowdown.

Labor market indicators are weakening.

  • Initial jobless claims for the week ending June 28, 2025, were 227,980, a slight decrease from the previous week. However, continuing claims increased to 1,974,000, up from 1,937,000 the prior week, indicating that more individuals are remaining unemployed for longer periods.

  • The unemployment rate remains low at 4.2%, but the uptick in continuing claims suggests potential future increases in unemployment.

Consumer spending is declining.

  • In May 2025, consumer spending decreased by $29.3 billion, marking a 0.3% decline. This drop is particularly notable in durable goods and motor vehicle purchases, sectors that typically signal consumer confidence.

  • The decline in spending is compounded by rising costs in essential areas.

Housing market pressures are mounting.

  • The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to 4.04% at the end of Q1 2025, up from 3.95% in Q4 2024. This rise indicates growing financial strain among homeowners.

  • Rent inflation has edged down to 3.9% in May 2025, the lowest since November 2021. While this is a positive sign, it still reflects a significant increase in housing costs over time.

Credit card debt remains high.

  • U.S. credit card debt stands at $1.182 trillion, a slight decrease from the previous quarter but still elevated. The high debt levels are concerning, especially as interest rates rise and borrowing becomes more expensive.

Economic growth is slowing.

  • Real GDP decreased at an annual rate of 0.3% in Q1 2025, according to the Bureau of Economic Analysis. This contraction follows a 2.4% increase in Q4 2024, signaling a potential economic slowdown.

Consumer confidence is waning.

  • The Conference Board’s Consumer Confidence Index for June 2025 indicates a decline in consumer sentiment. The index’s decrease suggests that consumers are becoming more cautious in their spending and outlook on the economy.