The Boomcession Economy: Strong Headlines, Weak Household Confidence

The U.S. economy is sending two very different signals. By conventional measures, economic conditions remain relatively strong: output has continued to expand, equity markets have benefited from enthusiasm around artificial intelligence, and unemployment remains low by historical standards. Yet households are considerably less optimistic. Consumer confidence is depressed, inflation expectations remain elevated, and the cumulative increase in essential living costs continues to weigh on household finances.

This divergence has given rise to a useful description of the current environment: a “boomcession.” The term captures an economy that looks like a boom in aggregate data and financial markets but feels recessionary to a meaningful share of consumers.

The Confidence Gap

Perhaps the clearest evidence of this disconnect is consumer sentiment. U.S. consumer confidence has fallen to 53.3%, roughly 38.8% below its 21st-century average of 87.5%. The decline is particularly striking because it has occurred without the type of deep economy-wide contraction normally associated with such pessimism.

The explanation lies partly in the difference between inflation and the price level. Inflation may have moderated from its post-pandemic peak, but that does not mean prices have returned to where they were. Housing, groceries, insurance, health care, and other essential expenses remain substantially more expensive than before 2020.

This burden is also unevenly distributed. Lower- and middle-income households spend a larger proportion of their income on necessities, making them more exposed to cumulative price increases. Meanwhile, households with significant financial assets have benefited more directly from rising equity markets.

Debt compounds the pressure. U.S. credit card balances reached approximately $1.28 trillion, while elevated interest rates have made revolving debt substantially more expensive to carry. For households without large savings or investment portfolios, strong GDP growth and record stock prices can therefore feel disconnected from everyday financial reality.

Inflation Is Down, but Inflation Anxiety Is Not

Consumer inflation expectations reinforce this divergence. Expectations have risen to approximately 4.7%, around 47.8% above the 21st-century average of 3.2%.

This matters because inflation expectations influence economic behavior. Households expecting persistent price increases may become more cautious about discretionary purchases, while workers may demand higher wages and businesses may remain more willing to increase prices. Expectations can therefore complicate the final stages of returning inflation sustainably toward the Federal Reserve’s target.

Health care provides another example of why household perceptions may remain weaker than aggregate inflation data suggest. Changes to Affordable Care Act subsidies are increasing the financial burden for many households, potentially producing significant increases in net premium payments. Even when headline inflation moderates, sharp increases in unavoidable expenses can reinforce the perception that household purchasing power remains under pressure.

The labor market adds another layer of uncertainty. Unemployment remains comparatively low, but slower hiring and revisions to previously reported employment growth have fueled discussion of a “hiring recession” or “jobless boom.” Rising productivity, potentially accelerated by AI adoption, creates an additional tension: companies may be able to generate more output without proportionally expanding employment.

A Strong Economy With an Unusually Large Deficit

The disconnect extends beyond households to the federal balance sheet. Historically, strong economic expansions and low unemployment provided governments with an opportunity to reduce fiscal deficits. Today, that relationship appears considerably weaker.

The federal budget deficit remained around 6% of GDP from 2023 through 2025, despite unemployment remaining near historically low levels. For 2026, the deficit is projected at approximately 5.5% of GDP, while unemployment is expected to reach 4.5%.

This combination is unusual. Large deficits are typically expected during recessions, when tax revenues decline and government spending rises to stabilize demand. Running deficits of this magnitude during relatively strong economic conditions leaves less fiscal capacity available when the next downturn eventually arrives.

The risk is amplified by higher interest rates. For years, the U.S. benefited from borrowing costs that were comfortably below nominal economic growth, making a rising debt stock comparatively manageable. That arithmetic has deteriorated as interest rates have moved closer to the economy’s growth rate.

This does not necessarily imply an imminent U.S. fiscal crisis. The more immediate concern is gradual crowding out: a growing share of federal resources devoted to interest payments, reduced flexibility for productive public investment, and potentially higher Treasury term premia that raise borrowing costs across the economy.

Financial Markets Are Pricing a Different Reality

The final piece of the boomcession is the extraordinary strength of financial markets, particularly AI-exposed companies. Since the release of ChatGPT, the largest technology firms have substantially outperformed the broader market as investors price in expectations of transformational productivity gains.

There are legitimate reasons for optimism. AI could increase productivity, expand margins, create new markets, and support long-term economic growth. But valuations also embed substantial expectations about future monetization that have yet to be fully realized.

This creates an increasingly important distinction between economic growth, market wealth, and household prosperity. All three can move in different directions.

For investors, that divergence may define the macro environment ahead. The U.S. can simultaneously experience resilient GDP growth, strong corporate profitability, elevated asset valuations, weak consumer confidence, persistent affordability pressures, and deteriorating fiscal arithmetic.

The boomcession is therefore less a contradiction than a reminder that aggregate economic strength does not automatically translate into broadly distributed financial security. The central macro question is no longer simply whether the economy is growing, but who is capturing that growth, how sustainable it is, and whether household purchasing power can eventually catch up with the headline numbers.

Sources & References

Daniel Antosz. Yahoo Finance. (2026). The US economy is booming on paper, but everyday Americans feel squeezed. Why one expert says we’re in a boomcession. https://finance.yahoo.com/news/us-economy-booming-paper-everyday-111500052.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAGGFIBfw2cG2iQjh9ioNQSkQuqjjsPlVZxuV8tR8buoqswed8kOuBvEj_7YzH_6YA5BJGAPTXcCUyQp0JjCHlWseIDTjqWWrz-wjOqyEDvfN9mzxhUR5MoJsYG6-QB5DkdmAc8c_ZyJ_Bn0cc0Em7T4hTK_l_gpSTExMueEnCZDC 

Organization for Economic Co-operation and Development, Consumer Opinion Surveys: Composite Consumer Confidence for United States [USACSCICP02STSAM], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/USACSCICP02STSAM, July 20, 2026.

Stanford university. (2026). The U.S. economy in 2026: What to watch for. https://siepr.stanford.edu/publications/policy-brief/us-economy-2026-what-watch 

University of Michigan, University of Michigan: Inflation Expectation [MICH], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MICH, July 20, 2026.