This is the state of the economy (ahead of the State of the Union)

The state of the union’s economy is surprisingly strong.

On paper, anyway. Jobs, wage growth, consumer spending and inflation under President Donald Trump look pretty decent or have been mostly stable and the stock market is near a record high.

Yet Americans despise this economy. Consumer confidence is near record lows and recent polling shows Trump’s economy gets dreadful grades from potential voters – a political liability for Republicans ahead of this year’s midterms.

Why such negativity?

Affordability. It’s a term Trump hates (and says he has defeated). But following the pandemic, prices surged during the Biden administration and consumers haven’t yet adjusted. Housing and child care in particular are largely unavailable and unaffordable. And loan delinquencies, especially for lower-income Americans, are starting to get worrisome.

Trump on Tuesday night is set to deliver this year’s State of the Union address. Here’s a look at some of the economic indicators that appear strong, those that are seemingly stable, and the ones that are raising red flags.

Despite a recent tariff- and AI-induced sell-off this year, stocks remain near their all-time highs. The market is decidedly not the economy, but enthusiasm from Wall Street helps pad retirement accounts, which can give consumers the confidence to spend their money.

The US economy grew 2.2% in 2025. Although that was the slowest pace since 2020, it was very much in line with the last three years of robust economic growth. And the longest-ever government shutdown shaved a bunch of productivity off the books in the fourth quarter – growth that the US economy should be making back this quarter.

The solid (but not on a sugar high) growth could keep inflation in check. The not-too-hot, not-too-cold growth led Stephanie Roth, chief economist at Wolfe Research, to call this economy “Goldilocks.”

The US labor market was historically weak last year. Federal Reserve Governor Christopher Waller – one of Trump’s finalists for Fed chair – said this week that he thinks jobs data revisions will ultimately show 2025 was one of just three years since World War II in which the US economy lost jobs.

So what’s “stable” about that? US job growth was significantly stronger than expected in January, the unemployment rate remains low, and the economy doesn’t actually need to create that many jobs because of historically low immigration and birth rates. Economists believe the job market may be on the path to recovery

The bad news: Paycheck growth has been on a steady slide for more than three years. The good news: so has inflation, which is slowing at a faster rate.

After a couple of bounce-backs in the past two years, annual inflation (2.4%) appears to be on the downswing again. That means annual wage growth (3.7%) is making our paychecks stretch farther on the whole. Still, the imbalance in the economy — also known as K-shaped — means that’s more true for wealthier Americans than for low-income folks.

Income and wealth inequality are not new concerns for the US economy, but the gap between the haves and the have-nots widened this past year. While booming stock prices – themselves bolstered by rampant investment in artificial intelligence infrastructure – have increased prosperity for high-wealth individuals.

For some lower- and middle-income Americans, however, the finances just seem to get tighter, and burdens are growing. A growing share of American households are finding it increasingly difficult to pay down bloated credit card bills, to keep up with pricey car payments, to make student loan payments (deferred during the pandemic but now back in the mix), and to have enough money in the bank to cover their monthly mortgage check.

A troubling outcome of that wealth divide: A growing number of Americans are more than three months late on their loans. Mortgage delinquencies in particular have shot up in recent years, and car loan delinquencies are around where they were during the Great Recession. Student loan delinquencies surged after the US government ended the payment pause in late 2024.

Overall, Trump’s economic record in his second term looks set to be as much about the narrative as it is about the numbers.