US Economy

Briefing: US Economy Purpose: I'm interested in the health and future outlook of the US economy. Specifically the macro trends.

Key Insights

• The US economy is exhibiting a distinct "K-shaped" divergence between high-level productivity and consumer reality. While BofA Global Research highlights a structural rise in productivity—tracking at over 4% since last April and defying "secular stagnation" theories—the consumer experience is fracturing. High-income households are seeing spending growth of 3% driven by asset wealth effects, whereas lower-income spending is growing at less than 1%, with wage growth lagging behind an estimated 6% inflation rate. This split is forcing behavioral shifts, such as a durable move away from restaurants toward grocery spending during lunch hours, even as macro-level GDP forecasts remain robust at around 2.8% for 2026.
• All Systems Go
• The Lessons of 2025 and the Outlook for 2026
• Stocks rise to kick off February, SpaceX acquires xAI

• Jobs Report: US Labor Market Frozen in 2026 (What This Means Next)

• A massive AI infrastructure "supercycle" is projected to act as a primary GDP driver, independent of immediate software revenue. Capital expenditure by major hyperscalers (Microsoft, Google, Amazon, Meta) is projected to hit $460 billion in 2026, marking the largest industrial investment cycle in the US since World War II. This buildout is creating immense demand for "picks and shovels" inputs beyond just Nvidia chips, specifically causing shortages and price spikes in High Bandwidth Memory (HBM) and electrical transformers. While some analysts worry about the lag in cloud revenue returns, this tangible infrastructure spending provides a hard floor for economic activity and industrial growth.

• Gold prices have dropped: Analysts on whether to skip or buy the dip
• Disney's stock under pressure following earnings, Amazon, Alphabet, and AMD earnings preview

• The Lessons of 2025 and the Outlook for 2026

• Unconventional "hybrid" policy tools are emerging to manipulate interest rates outside of Federal Reserve control. Reports indicate that the Executive branch is bypassing the Fed's reluctance to lower rates by ordering government-sponsored enterprises (Fannie Mae and Freddie Mac) to purchase $200 billion in mortgage bonds. This intervention aims to force mortgage rates down to 6% and stimulates housing demand without official monetary easing, effectively blurring the lines between fiscal and monetary policy. Simultaneously, proposed caps on credit card interest rates (at 10%) threaten to disrupt credit availability and bank profitability, signaling a shift toward more direct government management of economic outcomes.

• Trump Is Forcing Mortgage Rates Down — Here’s How

• Trump's 10% Credit Card Interest Rate Cap — What Happens Next?

• The labor market is showing signs of a "freeze" characterized by downward data revisions rather than overt collapse. While headline unemployment figures remain low (hovering around 4.4%), underlying data reveals significant weakness, including a 328,000 drop in the labor force and massive downward revisions to prior job growth numbers (e.g., October jobs revised down by nearly 70%). This "frozen" state—where hiring and firing both slow dramatically—complicates the Federal Reserve's decision-making, as headline stability masks deteriorating participation and opportunity. This fragility suggests the economy is more vulnerable to shocks than GDP prints imply.

• Piyasalarda Fed Adayı Warsh Şoku! Ekonomide Kredi Kartı Harekatı Dr.Cüneyt Akman&Zeynep Ece Ulukaya

• Jobs Report: US Labor Market Frozen in 2026 (What This Means Next)

• Commercial adoption of AI is broadening the market recovery beyond the "Mag 7" technology stocks. Evidence from industrial and software earnings indicates a widening bull market, with the Dow Jones Transportation Average hitting record highs—a classic signal of broad economic health. Specific companies like Palantir are demonstrating that AI is moving from a hype cycle to a revenue reality, reporting 137% growth in US commercial revenue as businesses integrate operational AI layers. This suggests the "AI trade" is evolving from infrastructure speculation to tangible productivity applications across the broader economy.

• Stocks rise to kick off February, SpaceX acquires xAI
• Why Palantir stocked surged following earnings

• Palantir stock surges on earnings, why AI isn't the only game in town when it comes to investing

• Geopolitical risks are morphing into a new economic threat labeled "Geopolitical Stagflation." Analysts warn of a scenario where persistent supply chain shocks—driven by tensions in the Strait of Hormuz, South China Sea, and US interventions—collide with sticky inflation. This creates a feedback loop where prices rise (CPI) due to supply constraints even as economic activity stagnates, disrupting the traditional inverse relationship between unemployment and inflation (the Phillips Curve). This environment complicates interest rate policies, as rate cuts needed for growth could exacerbate inflation driven by geopolitical friction.

• Piyasalarda Fed Adayı Warsh Şoku! Ekonomide Kredi Kartı Harekatı Dr.Cüneyt Akman&Zeynep Ece Ulukaya
• Yapay Zeka "AIDA" Uyarıyor! İran ve Jeopolitik Stagflasyon Riski

• Consider Volatility the Cost of Admission

• The Federal Reserve faces an existential crisis regarding its independence, influencing global confidence. High-level claims of criminal investigations into Chair Jerome Powell, combined with the appointment of "hawkish" nominees like Kevin Warsh, are creating volatility in currency and precious metals markets. The perceived erosion of Fed independence is fueling a "sell America" trade among some global actors, accelerating central bank gold purchases as a hedge against a politicized dollar. However, contrary to the "de-dollarization" narrative, foreign ownership of US securities has actually hit a record $35 trillion, suggesting global capital still views the US as the ultimate safe haven despite political noise.

• Jerome Powell Under Criminal Investigation — Here's Why This Matters
• The Bull Has Room to Run
• Piyasalarda Fed Adayı Warsh Şoku! Ekonomide Kredi Kartı Harekatı Dr.Cüneyt Akman&Zeynep Ece Ulukaya

Emerging Patterns

• The Decoupling of Gold and Bitcoin: A clear divergence has emerged between Gold and Bitcoin regarding their economic roles. Gold is solidifying its status as a "sovereign hedge" and store of value, driven by record central bank buying (e.g., Poland, China) and geopolitical mistrust of the dollar system. In contrast, Bitcoin is increasingly trading like a high-beta technology stock correlated with equities, failing to act as a defensive asset during recent volatility. While Gold is buoyed by fundamental demand, Bitcoin is currently struggling with a lack of catalysts and fleeing speculative capital.
• Gold prices have dropped: Analysts on whether to skip or buy the dip
• Gold at Record Highs — Is a Crash Coming in 2026?

• How to play bitcoin and gold, Musk reportedly wants to merge SpaceX and xAI

• The "Three-P" World (Preferences, Personality, Politics): Global economics is shifting from a rules-based order to "geopolitics by personality," where the whims of individual leaders (US, China, Russia) dictate capital flows and supply chains. This shift is manifesting in trade—such as the US proposing tariffs while simultaneously cutting deals with India to reduce them—and in corporate strategy, where companies must localize supply chains to survive a fragmented "managed trade" environment.

• Consider Volatility the Cost of Admission
• Why bitcoin could move higher, plus US and India reach a trade deal, government shutdown latest

• The Bull Has Room to Run

• Regional Bank M&A and Consolidation: There is a growing expectation of consolidation within the US banking sector, which remains the least consolidated globally. Recent moves and commentary from bank CEOs suggest that smaller regional banks will increasingly merge to compete with "Too Big To Fail" institutions, driven by the need for scale to handle regulatory pressures and technology investments. This trend is creating specific investment opportunities in mid-sized financial institutions operating in high-growth metro areas.

• How to play bitcoin and gold, Musk reportedly wants to merge SpaceX and xAI
• Disney's stock under pressure following earnings, Amazon, Alphabet, and AMD earnings preview

Dissenting Views

• Consensus: The "De-dollarization" trend is a major threat to the US economy, driven by geopolitical rivals and a lack of trust in US fiscal policy.
• Dissent: Merrill Lynch data indicates the opposite is occurring in practice. Despite the "De-dollarization" headlines, foreign ownership of US securities hit a record $35 trillion in Q3 2025. The dissent argues that while rhetoric is anti-dollar, the lack of viable alternatives and the resilience of the US economy are actually deepening global reliance on US assets, making the "Sell America" trade a narrative rather than a financial reality.
• The Bull Has Room to Run

• Jerome Powell Under Criminal Investigation — Here's Why This Matters

• Consensus: The AI trade is becoming a bubble, with infrastructure spending far outpacing revenue generation.

• Dissent: Some analysts argue there is no bubble because investors are actually underestimating the necessary CapEx. They contend that the massive spending ($460B+) is supported by free cash flow, not debt, and that the infrastructure (data centers, power) has intrinsic industrial value regardless of immediate software monetization. They view the skepticism itself as a healthy sign that prevents true euphoria/bubble dynamics.
• Disney earnings top estimates, plus gold and silver volatility and price swings
• Why bitcoin could move higher, plus US and India reach a trade deal, government shutdown latest

Read & Act

What to read

• All Systems Go — This report provides the strongest counter-narrative to economic gloom, offering hard data on US productivity growth (4%+) and arguing that the "bull market" is supported by structural shifts rather than just hype. It is essential for understanding the "soft landing" or "no landing" thesis.
• Trump Is Forcing Mortgage Rates Down — Here’s How — This source details a critical shift in how economic policy is being executed. Understanding the pivot to using Fannie Mae/Freddie Mac for quasi-monetary policy is vital for anyone exposed to the real estate market or interest rate speculation.
• Gold prices have dropped: Analysts on whether to skip or buy the dip — A nuanced breakdown of the "picks and shovels" beyond just buying gold or chips. It connects the dots between AI infrastructure, energy needs (transformers), and commodity inputs (silver for solar), offering a more sophisticated view of the macro landscape.

What to do

• Audit your portfolio for "Infrastructure" vs. "Application" exposure. The data suggests the safest economic bet is on the physical buildout (energy, transformers, chips, materials) rather than assuming immediate mass adoption of AI software. Look for companies with pricing power in the supply chain (e.g., HBM memory producers) rather than generic software firms.
• Monitor the "K-Shape" in your own business or investments. If you are exposed to the consumer sector, distinguish between high-end services (wealth effect beneficiaries) and mass-market goods. The data on grocery spending vs. dining out suggests a defensive consumer at the lower end; adjust expectations for companies dependent on discretionary income from the bottom 50% of earners.
• Watch the "Hybrid" Policy signals. Don't just watch the Fed Funds Rate. Pay attention to executive orders regarding Fannie/Freddie and credit regulations. These "backdoor" liquidity measures may support asset prices (especially housing) even if the Fed keeps official rates higher for longer.