U.S. Economy: Soft‑Landing Dynamics into 2026
- Economic Growth: U.S. GDP growth slowed to 0.7% in Q4 2025, with Atlanta Fed GDPNow currently tracking ~3.7% for Q1 2026, driven by strong consumer spending and a reduced trade deficit. Inflation is easing, and trade policies are boosting domestic production and import substitution.
- Productivity Gains: U.S. labor productivity has rebounded post-pandemic, averaging 2% annual growth (2019–2025). Automation and digital technologies are driving efficiency and sustainable growth.
- Labor Market: Job openings are stable at 6.95 million, layoffs are slightly down, and unemployment remains steady at 4–4.5%. Wage growth is modest, helping to ease inflation pressures.
- Consumer Finances: Household credit stress is manageable, but student loan delinquencies have surged to 16.2% due to the end of loan forgiveness programs.
- Corporate Health: S&P 500 gross margins are strong at 70.3%, and business loan delinquencies are low at 1.3%. Credit markets remain robust, supporting M&A activity.
- Public Credit Markets: High-yield credit spreads are stable at 3.1%, with a shift toward higher-rated bonds (BB-rated bonds now make up over 50% of the index).
- Bank Lending: Loan-to-deposit ratios are stable at 72%, with banks maintaining strong capital buffers (Tier 1 capital at 14.1%). Lender sentiment is cautious but balance sheets are strong
👉 Read our latest U.S. Credit Report for full insights and updates.