The Mysterious U.S. Economy

Tom Barkin

Speech from Federal Reserve Bank of Richmond

Abstract: If you too like a good mystery, then you like the U.S. economy. How has the U.S. economy remained so resilient despite a slew of challenges? A big part of the answer lies with the consumer. Consumer spending makes up nearly 70 percent of GDP and despite the turmoil, consumers have kept spending. Why is investment so robust amid such challenging conditions? It’s not only data centers. Many business leaders explain they’ve concluded high uncertainty is the new baseline. They can’t afford to wait any longer. How can unemployment be so low when the news feels so bad? In addition to the continuing low-hire, low-fire environment, the low unemployment rate is also a result of a different, delicate balance: slowing labor demand growth has been accompanied by slowing labor supply growth. The inflation mystery is not whether inflation will come back to our 2 percent target or not. The FOMC has made clear that we are committed to doing so and that we have the tools we need.

Keywords: Business Cycles; Economic Growth; Inflation; Monetary Policy (search for similar items in EconPapers)
Date: 2026-08-13
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