Why hasn't the American economy crumbled yet?

Through financial history, we've seen legendary collapses from the smallest changes in policy or even a cent adjustment in the worth of a foreign currency. But at the same time, in just the last twelve months, the American government has announced tariffs, those same tariffs were cancelled, then announced again, and then cancelled, and then implemented, before cancelling them again, then implemented once again, we raised those tariffs, and then took the issue to court resulting in the government potentially having to pay back all of those tariffs. The American government has also threatened our most significant allies, the chairman of the Fed, and threatened multi-billion-dollar corporations, all while enduring the single largest government shutdown in American history. To summarize, this has been one of the most chaotic years in the history of the American economy, and we have still not experienced a recession.

Even with these issues, the economy still grew, unemployment remained at a manageable level, incomes went up, and the market, which is traditionally opposed to instability, reached all-time highs. Many have covered the idea that AI spending is making the numbers look good. AI companies are spending billions on infrastructure development, hiding possible problems with our current economy. According to the Bureau of Labor Statistics, our GDP was growing at a rate of 4.3% in Q3 of 2025. We do not have Q4 yet, but unless we see a drastic decrease, we have statistically experienced a great year of economic growth. But the trillions of dollars going towards AI data center development are now contributing more to this large growth than consumer spending; this is not a great sign, as America is the biggest consumer market in the world.

According to the Bureau of Economic Analysis, overall investment in the economy actually decreased ever so slightly in the 3rd quarter, bringing down the net growth figure overall. And this raises the question of how is investment keeping the economy alive while simultaneously decreasing in contribution to the overall economy. That is because the -0.02% decrease in investment is a net figure; AI spending alone would contribute about 2.5%, but this is being offset by companies selling down their own inventory. When a business buys inventory or some kind or other produced assets, it gets counted as a positive investment, but this also works inversely when they sell it. Businesses have been overwhelmingly selling things traditionally stored in warehouses previously to all tariffs. So this decrease in inventory nationally has basically completely offset investment spending in AI, but if we see this AI spending slow, investment numbers would appear much worse than portrayed currently.

While consumer spending has been outpaced by AI, it has still increased quite substantially. But the key problem is that spending is being driven primarily by the highest-earning households, which would traditionally still be good for the economy, but that's not necessarily true in this situation. Most of this increase in spending came as a result of an increase in spending in housing, healthcare, and tuition, which was primarily made up of pharmaceuticals, where prices have increased. One of the main problems is that there is simply not enough healthcare, with McKinsey and Company reporting that Americans were, on average, getting older, unhealthier, sicker, and overall generally less focused on their health. The second factor is that the large growth in weight loss drugs like ozempic have driven an extreme demand for pharmaceuticals. And the third variable is that many citizens are afraid they are gonna get pushed out of their current health insurance plans and have adopted the strategy of "use it before you lose it," raising general healthcare use. So, in the short term, all of this activity has contributed to consumer spending because of the drastically high price of both pharmaceuticals and healthcare in the United States.

All of this is excluding the largest factor; without Q4 data, the American economy has risen about 4 percent, but the US dollar has fallen by over 10% in comparison to other major currencies. The situation is not as simple as saying that we have a 6% net loss, but this rapid currency depreciation allows some of these figures to be inflated higher than traditionally seen while simultaneously illustrating future problems. For instance, the stock market has grown to record highs, explaining higher spending from wealthy households. But when denoted in other currencys the market has actually traded with no gain or decreased slightly. This depreciation has also allowed exports to be cheaper and imports more expensive, explaining the boost in both of those sectors. Generally, the situation is not great, but not nearly as bad as some predicted. The reality is it's simply too early to tell what will happen. The US economy is not invincible, but it is both very large and very privileged. The size of our consumer and financial markets means that certain things will not play out as quickly as many things will in other countries, and with this, combined with our many alliances with basically every other economy in the world, has kept the US from falling apart overnight. But we can only wait and see if the number of factors will eventually bring the American economy to its knees.