A version of this post first appeared on TKer.co

Despite weak consumer sentiment, an uptick in household debt delinquencies, and anecdotal reports of financial distress, the overarching narrative remains that consumers as a whole are healthy, and they are spending.

This is important because personal consumption accounts for about 70% of GDP.

On Thursday, we learned monthly retail sales grew 0.6% in June to $720 billion. This metric is hovering near record highs.

Retail sales remain very strong. (Source: Census via FRED)

This trend was confirmed last week by America’s largest banks, which know exactly how much money people have, how much they’re spending, and how they’re paying for it.

“The consumer basically seems to be fine,” JPMorgan Chase CFO Jeremy Barnum told analysts on Tuesday. “You see a little bit more stress in the lower income bands than you see in the higher income bands. But that’s always true. That’s pretty much definitionally true. And nothing there is out of line with our expectations.”

Barnum acknowledged concerns about debt delinquencies but argued there was little cause for alarm.

“Consumer credit is primarily about the labor market,” he explained. “In a world with a 4.1% unemployment rate, it’s just going to be hard, especially in our portfolio, to see a lot of weakness.”

The state of consumer spending can be described as cooling, but also “still positive” and “still growing,” Barnum said.

Other banks echoed that sentiment while addressing their second-quarter profits, which beat analysts’ forecasts.

“Consumer health remains very strong,” Citigroup CFO Mark Mason said. “We do anticipate further consumer [spending] cooling in the second half as … tariff effects play through.”

JPMorgan’s debit and credit card spending volume in Q2 was up 7% from last year. Citi’s branded credit card spending volume increased by 4%. Bank of America said its credit and debit card spending was up 4%. Wells Fargo’s purchase volume was up 4% for its debit cards and 8% for its credit cards.

BofA card data reflects growth in spending, but the growth has been cooling. (Source: BofA)

“Consumers remained resilient, with healthy spending and asset quality,” BofA CEO Brian Moynihan said.

“Consumers and businesses remain strong as unemployment remains low and inflation remains in check, credit card spending growth softened very slightly in the second quarter, but is still up year over year,” Wells Fargo CEO Charlie Scharf said.

As you’ll see below in TKer’s weekly review of the macro crosscurrents, card spending data from early July shows that consumers continue to spend at a healthy clip.

Just because consumers have been resilient doesn’t mean they’ll remain resilient.

As we’ve been discussing for months, the economic data, while growing, continues to cool.

This doesn’t mean the economy is doomed to fall into a recession. Rather, it’s just an acknowledgement and recognition that it has gotten harder to argue that growth is destiny.

For now, we’ll just have to keep watching the data — especially the hard data. Because so far, the economy continues to hold up, supported by healthy consumer spending.

There were several notable data points and macroeconomic developments since our last review:

👎 Inflation ticks higher. The Consumer Price Index (CPI) in June was up 2.7% from a year ago. Adjusted for food and energy prices, core CPI was up 2.9%, up from the prior month’s 2.8% rate.

(Source: Greg Daco)

On a month-over-month basis, CPI was up 0.3% and core CPI increased just 0.2%. If you annualize the three-month trend in the monthly figures — a reflection of the short-term trend in prices — core CPI climbed 2.4%.

(Source: Greg Daco)

⛽️ Gas prices tick lower. From AAA: “In the thick of summer, gas prices are laying low with the national average for a gallon of regular going down one cent from a week ago to $3.16. Pump prices have dipped to match the summer of 2021, the last time seasonal gas prices were this low. Meanwhile, a low-pressure system off the Gulf Coast has the potential, albeit low, to strengthen, and it’s something to watch as it moves westward. This time of year, tropical activity can have an effect on gas prices if there’s damage to refineries or if local flooding affects gasoline distribution or demand.”

(Source: AAA)

For more on energy prices, read: Higher oil prices meant something different in the past 🛢️

🛍️ Shopping ticks higher. Retail sales increased 0.6% in June to $720.1 billion.

(Source: Census via FRED)

Growth was broad-based, with just a couple of categories showing modest declines.

(Source: Wells Fargo)

💳 Card spending data is holding up. From JPM: “As of 11 Jul 2025, our Chase Consumer Card spending data (unadjusted) was 6.6% above the same day last year. Based on the Chase Consumer Card data through 11 Jul 2025, our estimate of the US Census July control measure of retail sales m/m is 0.63%.”

(Source: JPMorgan)

From BofA: “Total card spending per HH was up 4.5% y/y in the week ending Jul 12, according to BAC aggregated credit & debit card data. The jump in y/y growth was mainly due to the timing shift in Prime Day & other promotions (Jul 8-11 ’25 vs Jul 16-17 ’24). Relative to last week, online retail saw the biggest rise in y/y spending growth.”

(Source: BofA)

For more on consumer spending, read: Americans have money, and they’re spending it 🛍️

👍 Consumer sentiment improves from low levels. From the University of Michigan’s July Surveys of Consumers: “While sentiment reached its highest value in five months, it remains a substantial 16% below December 2024 and is well below its historical average. Short-run business conditions improved about 8%, whereas expected personal finances fell back about 4%. Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future.”

(Source: Univ. of Michigan)

Relatively weak consumer sentiment readings appear to contradict resilient consumer spending data. For more on this contradiction, read: What consumers do > what consumers say 🙊 and We’re taking that vacation whether we like it or not 🛫

💼 New unemployment claims tick lower — but total ongoing claims tick higher. Initial claims for unemployment benefits declined to 221,000 during the week ending July 12, down from 228,000 the week prior. This metric remains at levels historically associated with economic growth.

(Source: DoL via FRED)

Insured unemployment, which captures those who continue to claim unemployment benefits, rose to 1.956 million during the week ending July 5. This metric is near its highest level since November 2021.

(Source: DoL via FRED)

Steady initial claims confirm that layoff activity remains low. Rising continued claims confirm hiring activity is weakening. This dynamic warrants close attention, as it reflects a deteriorating labor market.

For more context, read: The hiring situation 🧩 and The labor market is cooling 💼

🛠️ Industrial activity improves. Industrial production activity in June increased 0.3% from prior month levels. Manufacturing ticked up by 0.1%.

(Source: Federal Reserve)

For more on economic activity cooling, read: 9 once-hot economic charts that cooled 📉

🏠 Mortgage rates tick higher. According to Freddie Mac, the average 30-year fixed-rate mortgage rose to 6.75%, up from 6.72% last week. From Freddie Mac: “The 30-year fixed-rate mortgage inched up this week and continues to stay within a narrow range under 7%. While overall affordability headwinds persist, rate stability coupled with moderately rising inventory may sway prospective buyers to act.”

(Source: Freddie Mac)

There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to the small weekly movements in home prices or mortgage rates.

For more on mortgages and home prices, read: Why home prices and rents are creating all sorts of confusion about inflation 😖

🏠 Homebuilder sentiment ticks higher. From the NAHB: “Builder confidence for future sales expectations received a slight boost in July with the passage of the One Big Beautiful Bill Act but elevated interest rates and economic and policy uncertainty continue to act as headwinds for the housing sector. … the latest HMI survey also revealed that 38% of builders reported cutting prices in July, the highest percentage since NAHB began tracking this figure on a monthly basis in 2022. This compares with 37% of builders who reported cutting prices in June, 34% in May and 29% in April. Meanwhile, the average price reduction was 5% in July, the same as it’s been every month since last November. The use of sales incentives was 62% in July, unchanged from June.”

(Source: NAHB)

🔨 New home construction starts rise. Housing starts increased 4.6% in June to an annualized rate of 1.26 million units, according to the Census Bureau. Building permits ticked up 0.2% to an annualized rate of 1.4 million units.

(Source: Census)

🏢 Offices remain relatively empty. From Kastle Systems: “Peak day office occupancy rose to 63% on Tuesday last week, only 1.2 points lower than the post-pandemic record high set in early June.. The average low was on Thursday (7/3) at 36.7%, more than 20 points lower than the previous week. New York City and Chicago experienced the largest decreases in occupancy leading up to the holiday, declining more than 30 points from the previous Thursday to 30.1% and 32.2%, respectively.”

(Source: Kastle)

For more on office occupancy, read: This stat about offices reminds us things are far from normal 🏢

😬 This is the stuff pros are worried about. From BofA’s July Global Fund Manager Survey: “Trade war triggering a global recession is still viewed as the #1 ‘tail risk’ according to 38% of FMS investors (down from 47% in June). Inflation preventing Fed rate cuts is the 2nd biggest ‘tail risk’ (20%), while 14% say the biggest ‘tail risk’ is the US dollar slumping on capital flight.”

(Source: BofA)

(Source: BofA)

📈 Near-term GDP growth estimates are tracking positively. The Atlanta Fed’s GDPNow model sees real GDP growth rising at a 2.4% rate in Q2.

(Source: Atlanta Fed)

For more on GDP and the economy, read: 9 once-hot economic charts that cooled 📉 and You call this a recession? 🤨

🚨 The Trump administration’s pursuit of tariffs threatens to disrupt global trade, with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get more clarity, here’s where things stand:

Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices.

Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — shifted its focus toward supporting the labor market.

But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less “coiled” these days as major tailwinds like excess job openings and core capex orders have faded. It has become harder to argue that growth is destiny.

Actions speak louder than words: We are in an odd period, given that the hard economic data decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continues to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up.

Stocks are not the economy: There’s a case to be made that the U.S. stock market could outperform the U.S. economy in the near term, thanks largely to positive operating leverage. Since the pandemic, companies have aggressively adjusted their cost structures. This came with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth.

Mind the ever-present risks: Of course, we should not get complacent. There will always be risks to worry about, such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets.

Investing is never a smooth ride: There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect as they build wealth in the markets. Always keep your stock market seat belts fastened.

Think long-term: For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak that long-term investors can expect to continue.

For more on how the macro story is evolving, check out the previous review of the macro crosscurrents. »

A version of this post first appeared on TKer.co