The U.S. economy grew at a 4.3% clip in the third quarter of 2025. The stock market has been hitting records. Unemployment, by historical standards, remains low. And nearly 60% of Americans believe the country is currently in a recession.
They’re wrong about the technical definition. But they might be more right about the lived experience than any GDP number can capture.
Welcome to the “boomcession,” a term coined by Matt Stoller, research director at the American Economic Liberties Project, to describe an economy that is simultaneously booming on paper and grinding down the majority of the people living inside it. Think of it as the spiritual successor to 2022’s “vibecession,” except this time the bad vibes come with receipts: record credit card debt, a frozen housing market, a job market running on fumes in a handful of sectors, and a spending engine increasingly powered by the wealthiest 10% of households.
The disconnect between what the economy is and what the economy feels like has become the defining economic story of 2026. And it has real consequences for markets, policy, and the businesses trying to navigate consumer behavior that refuses to follow the textbook.
An Economy Built on a Narrow Foundation
Here is the single most important economic statistic you’ll read this year: according to Moody’s Analytics, the top 10% of U.S. households now account for nearly half of all consumer spending. That share has been climbing steadily, from about 36% three decades ago to 46% in 2023 to 49.2% by mid-2025. Consumer spending drives roughly 70% of GDP. Do the math: a small fraction of households are propping up the single largest component of the American economy.
“It doesn’t feel like the economy’s perched on a strong foundation,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC. “It’s perched on a few poles that are sticking up. If one of those poles gets knocked out, then the whole economy gets knocked down.”
Those poles: a roaring stock market that has added more than $40 trillion to the wealthiest households’ balance sheets since 2020. Record home equity values. Continued premium wage growth for top earners. The top of the “K” in the K-shaped economy is doing spectacularly well. American Express reported a 6% spending increase among its affluent customer base in early 2025, including an 11% surge in premium airfare. JPMorgan Chase posted strong credit card growth, driven almost entirely by high-income clients.
Meanwhile, at the bottom of the K, things look very different.
$18.8 Trillion in Debt and Counting
The Federal Reserve Bank of New York’s latest Household Debt and Credit Report, released February 10, painted a picture that the GDP cheerleaders would rather you not examine too closely. Total household debt climbed to $18.8 trillion by the end of 2025, up $740 billion for the year. Credit card balances alone hit a record $1.28 trillion, with the average credit card APR hovering around 22%.
That last number matters more than the headline total. At 22% interest, a $10,000 balance generates $2,200 in annual interest charges before you pay down a single dollar of principal. More than half of consumers carrying credit card balances are using them for essentials: groceries, utilities, medical bills. This isn’t a spending problem. It’s an income problem dressed up as a credit problem.
Delinquencies tell the rest of the story. Some 7.13% of credit card debt is now 90 or more days past due. Student loan delinquencies have surged since the repayment moratorium ended, with roughly 30% of borrowers at least 90 days behind. The New York Fed itself used a telling phrase in its latest report to describe current conditions: a “K-shaped” economy.
When the central bank starts using the same language as economic critics, you know the gap has gotten too wide to ignore.
The Job Market Illusion
The unemployment rate looks manageable on paper. But the labor market has quietly shifted into what economists describe as a “low-hire, low-fire” environment. Companies aren’t laying off workers in huge waves, but they’re not hiring much either. Job openings have contracted. The quits rate has fallen, signaling that workers feel less confident about finding something better. Wage mobility has slowed, particularly for lower-income households, where after-tax wage growth has crawled to just 1.4%, compared with 4% growth for higher earners.
And then there’s the sector concentration. Health care accounted for more than half of net job growth in January’s payroll report. Strip that one sector out, and the employment picture looks considerably less impressive. The Roosevelt Institute’s 2026 economic preview warned that job growth risks remaining “slow and narrowly concentrated in health and education services” unless broader economic conditions shift.
Employers announced more than 1.1 million job cuts through November 2025, a 54% increase from the prior year, according to Challenger, Gray & Christmas. Amazon, Target, Verizon, Home Depot, and UPS have all trimmed headcount in recent months. The AI anxiety layered on top of an already cautious hiring market has turned career planning into an exercise in uncertainty for millions of workers.
“Looking ahead to 2026, the question won’t be whether the market thaws,” Indeed warned in a recent report. “It will be whether it cracks.”
Housing: The Market That Broke the Middle Class
If there’s a single issue that explains why a growing economy feels so punishing to so many Americans, it’s housing. Mortgage rates have stubbornly held above 6%. Home prices remain near record highs despite reduced buyer demand. The result is a market frozen in place, with neither buyers nor sellers willing to move.
For would-be buyers, especially millennials, the math simply doesn’t work. The median mortgage payment hit $2,025 per month at the end of 2025. Millennials’ cumulative borrowing has grown to 160% of their liquid asset accumulation since 2020, according to RBC Economics, far outpacing previous generations at the same age. They’re building wealth on paper through rising home values but remain effectively “house poor,” with little capacity for discretionary spending.
Redfin has dubbed 2026 “The Great Housing Reset,” but expects any turnaround to be a “long, slow recovery.” In a PBS News/NPR/Marist poll conducted this month, 70% of respondents said the cost of living in their area was unaffordable. Housing is the biggest reason why.
The policy response has made things worse in some respects. Deportations have thinned the construction workforce. New lumber tariffs have raised building costs. Federal deficit spending is competing with private borrowers for capital, pushing interest rates higher across the board. Every lever that could theoretically ease the housing crisis has been pulled in the wrong direction.
Tariffs, Prices, and the Inflation That Won’t Die
President Trump has rated the economy “A-plus-plus-plus-plus-plus.” The data is less enthusiastic. Consumer prices remain roughly 25% higher than pre-pandemic levels, and the average effective tariff rate, at 17%, is about five times what it was before Trump took office. Those tariffs have added cost pressure across supply chains, though the feared broad inflation spike hasn’t fully materialized.
What has materialized is something more insidious: a permanent reset in the cost of everyday life. Inflation may have slowed from its 9.1% peak in June 2022, but prices haven’t come back down. They’ve just stopped rising as fast. For a family that watched grocery bills, energy costs, and insurance premiums jump 20-30% over three years, the fact that prices are now rising “only” 2-3% annually offers little comfort. The damage is baked in.
Economists at the Roosevelt Institute note that the vibe shift in consumer sentiment is increasingly driven by the job market rather than price growth alone. Americans remain concerned about affordability, but it’s now “increasingly a function of a weak job market and weak income growth, rather than the price growth story that has dominated headlines since the pandemic.”
The Political Economy of Discontent
The boomcession isn’t just an economic phenomenon. It’s a political one. The confidence gap between how the highest and lowest earners feel about their financial situation grew to its widest in more than a decade in 2025, according to the University of Michigan’s Surveys of Consumers. That gap helps explain why affordability has become the single most potent campaign issue in American politics, cutting across party lines.
It also explains the growing skepticism of official economic data. A YouGov survey found that fewer Americans trusted federal economic reports than distrusted them by the second half of 2025. When the government tells you the economy is growing while your savings account is shrinking and your credit card balance is climbing, the rational response isn’t to question your own experience. It’s to question the numbers.
“Multiple experiences can be true,” Elizabeth Renter at NerdWallet told CNBC. “The economy can be doing quite well, and millions of people are pretty uncomfortable in it at the same time.”
What Actually Breaks This Cycle
The optimistic case rests on two pillars: AI-driven productivity gains and a potential easing of interest rates. Campbell Harvey, an economist at Duke University, told Al Jazeera that 2026 could be the year AI technologies begin delivering substantial productivity improvements. If that happens, the benefits could spread more broadly through the economy, lifting wages and creating new job categories.
The pessimistic case is simpler: a stock market correction. If the AI investment boom turns out to be overvalued, and equity prices drop meaningfully, the wealthiest households that are currently sustaining the economy would pull back on spending. Stanford’s Institute for Economic Policy Research estimates that wealth effects are currently contributing roughly $100 billion, or 0.4% of GDP growth. Reverse that, and the narrow foundation holding up the economy gets even narrower.
The realistic case is somewhere in between: a grind. Not a collapse, but not a broad-based recovery either. As GovFacts put it in its 2026 outlook, this year “promises not a collapse, but a grind: a year where growth is purchased at the price of higher debt and continued uncertainty.”
For the roughly 150 million American workers who don’t have $250,000 in household income, who haven’t watched their stock portfolios double, who are paying 22% interest on credit card balances they wish they didn’t carry, the boomcession isn’t a clever economic label. It’s just Tuesday.
The economy is growing. Just not for them.
