Main Street Wobbles While Wall Street Celebrates
- David Halseth
- May 31
- 2 min read
For the week ended 5/30/26.
Last week delivered another reminder that the U.S. economy is rarely as simple as the headlines suggest.
Let's start with the less exciting news. The Commerce Department revised first-quarter GDP growth down to 1.6% from the initial estimate of 2.0%. The primary culprits? Lower consumer spending and weaker inventory investment. In other words, consumers appear to be easing off the accelerator after years of spending money like a teenager with their parents' credit card.
Speaking of credit cards, there is another flashing caution sign worth noting. The percentage of balances at least 90 days delinquent rose to 13.1% during the first quarter, the highest level in 15 years. Considering average credit card interest rates have jumped from 14.6% in early 2022 to roughly 21% today, it's not exactly shocking that some households are feeling the squeeze. At those rates, your credit card company doesn't want you to pay off your balance – they want to introduce you to their grandchildren.
Inflation also refused to cooperate. Core PCE, the Federal Reserve's preferred inflation gauge, ticked up to 3.3% year-over-year from 3.2% the previous month. Not exactly the direction policymakers were hoping to see.
Now for the good news.
Corporate America continues to crank out profits at an impressive pace. After-tax business earnings rose 3.3% from the prior quarter and an eye-popping 17% from a year ago. Even more impressive, S&P 500 earnings growth is currently tracking near 29%, which would mark the strongest pace since late 2021. Once again, artificial intelligence remains the market's favorite performance-enhancing drug.
Meanwhile, falling oil prices provided another tailwind for investors. Brent crude fell 19% during May while U.S. benchmark crude dropped 17%, fueled by optimism surrounding a potential U.S.-Iran peace agreement. The result? Stocks continued their remarkable rally. The S&P 500 logged its ninth consecutive weekly gain, while the Nasdaq just completed its strongest two-month stretch since 2002.
Looking ahead, all eyes turn to Friday's employment report. Economists expect unemployment to hold steady at 4.3% while payroll growth slows to approximately 95,000 jobs.
With that, enjoy your coffee, your summer weather, and the increasingly strange reality where consumers appear tired, credit card companies are thriving, and Wall Street can't stop throwing parties. Good morning.
Interesting data point of the week.
