The U.S. economy is surging ahead, and it doesn’t look like it’s heading for a recession. Despite some anxiety and fear about the near future, American consumers continue to spend, and the corporate world shows no signs of slowing down, consistently beating revenue and net profit forecasts. All of this is immediately reflected in the performance of major stock indices, which set new all-time highs almost daily, forcing pessimists to sheepishly forget their earlier predictions of a potential massive market crash. The only question is: how safe is it to believe in eternal growth, and are these “bearish” views really so foolish? This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
The economy still looks solid: GDP grew 2.7% year-over-year in Q1. Government spending increased, consumer spending rose modestly, and—most importantly—private investment surged, largely driven by AI infrastructure. That said, the details are less reassuring: consumer spending growth slowed to 1.6%, and rising government outlays come against the backdrop of an already large deficit and massive debt.
Inflation remains the key concern. The PCE Index rose 0.7% in March, reaching 3.5% YoY, while core PCE stands at 3.2%—still far above target. This explains why the Federal Reserve System is in no rush to cut rates.
The latest Fed meeting brought no surprises—rates were unchanged. However, the 8–4 split among policymakers (the first since 1992) signals growing internal disagreement. Jerome Powell made it clear he intends to stay on as a governor after his term ends, citing unprecedented legal pressure that, in his view, threatens the Fed’s independence.
His likely successor, Kevin Warsh, has already been approved by the Senate Banking Committee, with final confirmation expected to be a formality.
On the corporate side, the “Mag 7” (Amazon, Meta, Alphabet, Apple, Microsoft) delivered strong earnings, beating both revenue and profit expectations. But the real focus is capex: projected AI-related spending has now risen to roughly $725 billion for 2026. Companies are cutting costs and even seeking external funding to keep up with the AI race—because slowing down is simply not an option.
Meanwhile, the situation around the Strait of Hormuz remains unresolved. Oil prices jumped 12% last week alone, yet markets seem increasingly indifferent. That optimism may be premature.
What’s next? It’s tempting to celebrate record highs and buy into the momentum. But the reality is less comfortable: current valuations, combined with geopolitical risks and inflation pressures, suggest a high-risk environment. Right now, most of the optimism rests on AI—and that alone may not be enough to justify confidence in the long term.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
