Don’t Be Fooled by the Strong Economy Illusion
Peter Reagan

I like being the bearer of good news. 

Everyone does, really. After all, does anyone really like walking up to people and telling them what they don’t want to hear (unless they’re just being spiteful)?

No, they don’t, and I’m just like the average person in that regard: I prefer telling people something good. I prefer telling people something that makes them smile and feel hopeful.

Having said that, there is good news on the economic front these days.

Tell us the good news!

Reuters reports that U.S. construction spending was up in March 2026 which means that builders expect for the housing market to grow. 

That’s a positive sign that people have money to make down payments and mortgage payments which says that they feel more secure in their jobs and income.

It’s always a good sign when consumer confidence indicates that people feel safe spending money and putting down roots someplace.

Then, Lucia Mutikani with Reuters writes that the U.S. labor market is stable and isn’t showing signs of stress. That news also points towards a strengthening economy that is working for people.

Other reports, both from Reuters, give more reason to be positive about the economy. 

One report indicates that the Fed is optimistic that AI’s will help to grow the economy, and the other report says that private capital is also positive about the expected impact of AI.

All of that together would seem to be reason to celebrate, and I’m certainly not going to stop you from enjoying a nice toast towards a bright future. I do like being the bearer of good news after all.

But like so many things in life, there is more to the overall picture than meets the eye when you go beyond the surface level.

What’s the other side?

Here’s the part that I wish that I didn’t have to do, but I value being honest with you above being Mr. Pollyanna.

There is a flip side to the positive economic news.

On the housing front, while construction spending is up, there are concerns that higher mortgage rates could dampen home sales and that construction growth.

No one really wants that construction spending to be short-lived, but, being realistic, that is a possibility.

It doesn’t help that the Fed, seemingly satisfied with the stable labor market, appears to be keeping interest rates unchanged which won’t help mortgage rates come down.

But that’s not all that’s concerning about the labor market. With a low hire, low fire market, there is a tendency for companies to start paying more to keep the good talent that they have. Those higher wages are larger bottom-line expenses for those businesses, and, as happens when expenses go up, so do prices.

In short, the stable labor market could cause an increase in inflation, which, I’ll remind you, is already well-above the Fed’s target inflation rate of 2% (annualized inflation in March 2026 was 3.3%, well over the Fed’s target).

Nobody wants a return to Covidflation. Nobody.

But what about the economic growth that AI is expected to bring? 

Well, the Fed says that it will have to be “on the lookout ​for overheating.”

Translation: the Fed is concerned that an AI-generated economic boom would increase inflation, too.

It’s not just the Fed concerned about that, though. The private investors that I mentioned earlier who were optimistic about AI-driven economic growth? They’re also concerned about the inflation that the growth could cause.

Put simply: all of the good news about the economy (and there is good news about the economy) has the very real possibility, even the likelihood of having effects that come back to bite us.

So much for being the bearer of good news…

And, then, there’s the bad news that is already happening…

Yes, even with the good news on the economic front, not everyone is feeling that good news right now.

David Rovella with Bloomberg reports that lower-income Americans are struggling to make ends meet. Kraft Heinz CEO Steve Cahillane said, “They’re literally running out of money at the end of the month,” and “We’re seeing negative cash flows in the lower-income brackets where they’re dipping into savings.”

And my observation is that it’s not just lower-income Americans having to tighten their belts. Middle class Americans are struggling to feed their families, and those on fixed incomes, such as retirees, often aren’t faring any better.

When the CEO of the third largest food company in America (and the fifth largest in the world) says that their customers are struggling to be able to buy ketchup and pay for mac and cheese, you know that the average family is struggling.

And if they can’t afford to buy basic, inexpensive food staples to make it through to the end of the month without missing a meal, then you know that folks on a fixed budget are struggling to pay their rent, to pay the copay on their prescriptions, and to afford to pay for gas to go to the doctor.

The economy may be improving, but not everyone is feeling the good part. Many are just feeling the struggle.

But what can be done?

For some folks, they are already in the midst of the struggle, and all that they can do is to try to work their way out of it, scrimping, saving, and looking for ways to bring in an extra dollar or two.

But if you’re not already mired in the struggle, then you still have an opportunity to take steps to prevent ever falling into that struggle session.

How?

For many people, they are choosing to diversify into an asset class whose valuation, measured in real purchasing power, isn’t dependent on the strength of the economy or on what the Fed does to inflate the currency. They are choosing to diversify into precious metals as a defense against future inflation and economic volatility.

If you would like to get more information about diversifying into precious metals to begin your due diligence, you can get our free 2026 Precious Metals Info Kit. Or if you already know that you’re ready to diversify into precious metals, give us a call at (877) 749-7738.

 

 

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.

 

www.birchgold.com