Bob Elliott
· Nonconsensus
· February 12, 2026 at 11:09
· ⏱ 3 min read
| Read on Substack ↗
Summary
=== SUMMARY ===
•The US economy is at a critical juncture where strong household spending, funded by dissaving, has diverged from weak income and wage growth. The key question for 2026 is which will converge to the other.
•Recent positive labor market data (strongest private payrolls in a year) in the context of an already tight labor supply "gently pushes the odds" in favor of a positive outcome, where incomes re-accelerate to support spending.
Summary
The author observes that the US labor market is showing signs of improvement. Given that the prime-age workforce is already the tightest in decades, even a modest pickup in jobs and wages could be sufficient to fuel the income gains needed to sustain recent levels of consumer spending.
•The US labor market appears to be improving.
•The prime-age workforce is already at its tightest level in decades.
•Even a small improvement in jobs could drive income gains and support continued consumer spending.
•This follows a period where businesses kept hiring and wage growth subdued despite strong demand and profits.