Hard Data Trumps Soft Data and Media Narrative
The financial press and sentiment surveys keep insisting that the U.S. economy is teetering on the brink of recession. But hard data tells a different story.
Economic activity in the U.S. remains robust, even as the media clings to dire warnings from consumer sentiment surveys. The “Recession That Never Happened” is just a politically driven narrative. The real economy is growing, while politically charged sentiment data continues to lag far behind.
Just listen to Fed Chair Jerome Powell, who told reporters this week that while economic growth may be moderating, it remains solid.
“Growth looks like it may be moderating a bit. Consumer spending, moderating a bit but still at a solid pace. Unemployment’s 4.1 percent. Job creation most recently has been at a healthy level. Inflation has started to move up now, we think partly in response to tariffs, and there may be a delay in further progress over the course of this year. So that’s the hard data. Overall, it’s a solid picture,” Powell said.
Federal Reserve Chair Jerome Powell speaks at a press conference after the Federal Open Market Committee Meeting in Washington, DC, on March 19, 2025. (ROBERTO SCHMIDT/AFP via Getty Images)
His view echoes Bank of America’s recent analysis, which highlights the strength of hard data even as surveys paint a much gloomier picture. “You can’t rely on sentiment surveys to tell you the state of the economy,” Bank of America argued, pointing out that real economic activity continues to hum along despite survey-driven pessimism.
Housing, Industrial Production, Retail Sales, and Inflation Are All Improving
Housing Starts Roar Back: February saw housing starts surge 11.2 percent to a seasonally adjusted annual rate of 1.5 million. That’s a big jump from January’s downwardly revised 1.35 million. Single-family starts rose 11.4 percent to an annualized 1.11 million, while multi-family construction climbed 10.7 percent. Builders are clearly responding to strong demand despite concerns over mortgage rates and supply constraints.
Existing Home Sales Surge: Existing-home sales jumped 4.2 percent in February to a seasonally adjusted annual rate of 4.26 million, sharply exceeding expectations. Even with rising prices, buyers are coming back into the market, defying claims of economic weakness. The median price rose 3.8 percent year-over-year to $398,400, marking the twentieth consecutive month of price increases.
Industrial Production Forges Ahead: Industrial production rose 0.7 percent in February, more than triple the 0.2 percent increase economists had expected. Manufacturing output jumped 0.9 percent, led by an 8.5 percent rise in motor vehicle and parts production. Mining output also expanded by 2.8 percent, contributing to the overall surge.
Retail Sales Go Ca-Ching: After falling sharply in January, retail sales rose by 0.2 percent in February. More importantly, the “control group” measure of retail sales, which feeds directly into GDP calculations, climbed by a very healthy one percent. Despite gloomy forecasts, consumers are still spending.
Inflation Is Cooling: Inflation indicators suggest progress in taming price pressures. The Producer Price Index was flat in February, while the Consumer Price Index rose just 0.2 percent, the smallest increase since last August. Egg prices, a symbol of last year’s inflation surge, have dropped 15 percent in early March.
Behind the Hard Data-Soft Data Mismatch
It’s important to understand why sentiment surveys and economic reality are telling two very different stories. The latest University of Michigan survey shows consumer sentiment collapsing among Democrats, likely driven by partisan reactions to Trump’s policies rather than actual economic hardship. The expectations index for Democrats fell to its lowest level ever recorded—28.2—while Republicans’ sentiment remains buoyant at 95.7. Independents are somewhere in the middle.
The truth is that the real economy has been far more resilient than many have been willing to acknowledge. What we are witnessing is not a deteriorating economy but a media narrative driven by flawed sentiment surveys and politically biased data interpretation. The “Recession That Never Happened” is already over, and the numbers prove it.
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