The U.S. Economy’s Soft Landing Is Still on Track

Despite the recent spate of disappointing macroeconomic indicators, these developments are actually a sign of strength, not weakness, in the U.S. economy. The economic pessimism of recent years is often rooted in a misguided view of American consumers. They are often seen as financially strapped, having exhausted their pandemic-era savings and reeling from a decline in real income due to inflation. In this story, demand is set artificially high and its collapse is delayed rather than avoided. Consumption is also still distorted by post-pandemic fluctuations, but total spending is more than $1.5 trillion above 2019 levels in real terms. However, this strength is not a panacea for all companies. Although high interest rates have been well absorbed overall, they still pose a struggle for survival for some businesses and households. Business leaders need to resist the temptation to adjust their mental models to accommodate every wrinkle in volatile data and lead through tight times.