Introduction

At the beginning of 2026, the U.S. economy presents a complex and contradictory appearance. On the one hand, official data shows strong economic growth, with real gross domestic product (GDP) annualized growth reaching 4.4% in the third quarter of 2025 and expected to be 3.0% in the fourth quarter, much higher than the historical average; on the other hand, the public's perception of the economy is generally negative, with surveys showing that most people believe the economy is weak. This disconnect stems from multiple factors, including a huge national debt, high consumer debt, lagging income growth, and a growing divide between rich and poor. At the same time, the price of gold exceeded the US$5,000/ounce mark, and as of February 20, 2026, the gold price had risen to US$5,035/ounce, symbolizing investors' distrust of the traditional monetary system.

The U.S. national debt has climbed to US$38.43 trillion (data in January 2026), an increase of US$2.25 trillion from a year ago, with an average daily growth of US$8.03 billion. This level is equivalent to more than 120% of GDP, a record high. The debt growth is not only due to post-pandemic stimulus measures, but also a new round of fiscal expansion under the Trump administration. Consumer debt also hit a record, with total household debt reaching $18.8 trillion, including $1.28 trillion in credit card debt, $1.67 trillion in auto loans, and $1.66 trillion in student loans. The data reflect the fragility behind the economy's apparent prosperity: growth relies on borrowing and consumption rather than organic income gains.

The gap between economic data and public perception stems from the limitations of statistical methods. GDP primarily measures spending but ignores income distribution and sustainability. In 2025, the annualized growth rate of real disposable income in the United States will be -1%, while GDP growth will be more than 3.5%. This divergence suggests that economic growth is being "whitewashed" by a handful of factors, such as lower imports (due to the trade war) and consumption by the wealthy (thanks to stock market gains). Although the unemployment rate has dropped to 4.3% (January 2026), employment growth has slowed, and total hours worked have not increased in the past three quarters, indicating that labor input has stagnated.

In this context, the attractiveness of gold prices as a "hard asset" is highlighted. The price of gold rose 71.74% (year-on-year), which was not only affected by geopolitical tensions (such as the US-Iran conflict) and the Federal Reserve's policy, but also due to investors' expectations of the depreciation of the US dollar. The U.S. Dollar Index (DXY) is currently hovering in the 94-97 range and is forecast to fall to 92-98 in 2026. At the policy level, the Trump administration is pushing for interest rate cuts and stimulus, and the Fed's independence is facing challenges, which may further distort the market.

U.S. Debt Crisis: Scale and Impact

The rapid accumulation of U.S. national debt has become an economic concern. In January 2026, total debt reached US$38.43 trillion, an increase of US$10.73 trillion from five years ago. Data from the Congressional Joint Economic Committee show that the annual debt growth rate is equivalent to $8.03 billion per day, or $92,912 per second. If the current growth rate is maintained, it will exceed US$39 trillion by April 2026. The Congressional Budget Office (CBO) predicts that the federal deficit will reach US$1.9 trillion in fiscal year 2026, with the debt-to-GDP ratio rising to 120%.

The main drivers of debt growth include: first, the Trump administration’s trade war and tariff policies, which have led to a reduction in fiscal revenue; second, the aftermath of the epidemic and the legacy of stimulus spending; third, a new round of tax reform and infrastructure investment. After Trump came to power, he pushed for a "package of beautiful bills" that included tax cuts, deregulatory and tariff revenue redistribution. These measures stimulated growth in the short term but exacerbated the deficit. CBO estimates that interest payments will reach $1 trillion in 2026, equivalent to a significant portion of the federal budget, squeezing spending in areas such as education and health care.

Consumer debt is also a concern. The New York Fed's fourth quarter report for 2025 showed that total household debt increased to $18.8 trillion, an increase of $191 billion from the previous quarter and an annual increase of $740 billion. Credit card debt rose to $1.28 trillion, an increase of $44 billion; auto loans rose to $1.67 trillion, an increase of $12 billion; and student loans rose to $1.66 trillion, an increase of $11 billion. These debt levels have exceeded the US$4.6 trillion before the epidemic, reflecting the dependence of low- and middle-income groups on borrowing to maintain their lives. The delinquency rate is rising: the serious credit card delinquency rate reaches 16.2%, and the student loan delinquency rate is 9.6%. Although the overall delinquency rate is sluggish, mortgage delinquency is accelerating in low-income areas.

Analytical comments: High debt is not a purely financial problem, but a systemic risk. The Keynesian view is that debt can stimulate growth, but the current debt/GDP ratio is too high, close to World War II levels, which may trigger inflation or a credit crisis. The Mundell-Fleming model shows that under a floating exchange rate, high debt may cause the dollar to depreciate, pushing up import costs and further worsening inflation. In comparison, Japan’s debt is higher (accounting for 260% of GDP), but its internal holding rate is high (90% domestic). The foreign holding rate of U.S. debt reaches 30%, making it vulnerable to international capital flows. If China and others reduce their holdings of U.S. debt, interest rates will soar. Investors should be wary of the debt ceiling debate, which could trigger market volatility.

GDP growth is inconsistent

US GDP data seems strong, but analysis reveals weaknesses. The annual GDP growth rate in the third quarter of 2025 was 4.4%, higher than the initial value of 4.3%, benefiting from consumption, exports and government spending. Consumer spending contributes the most, accounting for 70% of GDP, but it relies on the wealth effect of the stock market: the stock market will return more than 20% in 2025, and the consumption of the rich is strong. The decline in imports (due to the trade war) also "artificially" inflates GDP, because the GDP formula is consumption + investment + government spending + exports - imports.

However, underlying indicators were weak. Over the past three quarters, total hours worked have not increased, and employment growth has been “flat as a pancake.” In January 2026, non-farm employment increased by 130,000, higher than expected by 55,000, but it was revised downwards the previous month. The unemployment rate fell to 4.3%, but the U6 unemployment rate (including part-time and discouraged workers) reached 8%, indicating underutilization of the labor force. Real disposable income will be -1% annualized from April 2025, in sharp contrast to GDP growth of 3.5%.

Inventory changes and trade factors distort the data. Inventory decline in the third quarter of 2025 will be a drag, but the fourth quarter is expected to be flat and contribute positively. Exports grew moderately, imports rose slightly, and the net contribution was limited. The Atlanta Fed's GDPNow model predicts growth of 3.0% in the fourth quarter of 2025, with consumption slowing to 2.5% (3.5% in the previous quarter) and investment weak.

Analytical comments: The limitations of GDP as a single indicator are fully exposed. The traditional Keynesian model emphasizes expenditure-driven growth but ignores the income side. In the current "K-shaped" recovery, growth relies on consumption by the wealthy and policy stimulus, which is unsustainable. Mankiw, an economist at Harvard University, pointed out that under high debt, GDP growth may be "hollowed out," that is, short-term prosperity is exchanged for long-term recession. Compared with the EU (1.5% growth in 2025), the US data is impressive, but if the impact of imports and inventories is excluded, economic growth in the past three quarters was zero. Investors should pay attention to leading indicators such as weekly unemployment claims (which recently fell to 206,000), which indicates a stable labor market, but if the trade war escalates, exports will be pressured.

K-shaped economy: the deepening of the polarization between rich and poor

The economic recovery shows a "K-shaped" characteristic: the upper class benefits while the lower class struggles. The top 10% have enjoyed huge stock market returns, and the personal savings rate has dropped to 3.5% from 5% in April 2025, supporting consumption. The stock market (S&P 500) has returned more than 20% for three consecutive years, AI and data center investment increased by 15%, while traditional industry investment -4%.

The groups at the bottom are under pressure. Consumer debt is at record highs and delinquency rates are rising. The extension of the buy now pay later (BNPL) program to rent payments shows the high cost of living. Housing affordability is at a record low, and mortgage delinquencies are accelerating in low-income areas. Surveys show that most people feel the economy is weak as wage growth lags inflation. Real wage growth in 2025 is only 1%, far less than the increase in the cost of living.

Employment differentiation has intensified. Employment in technology and health care was strong, while other industries were flat. Women and minorities have higher-than-average unemployment rates. A report from the New York Fed showed that early delinquency rates on non-housing debt were stable, but overall credit problems increased slightly.

Analytical comments: The K-shaped economy amplifies social inequality and may trigger political unrest. Piketty's theory holds that the rate of return on capital is higher than the economic growth rate, leading to concentration of wealth. At present, AI investment is "breathing oxygen" and traditional industries are withering, similar to the differentiation of the industrial revolution in the 19th century. Policy stimulus (such as tax refunds of US$150 billion) can boost GDP by 0.3% in the short term, but it is not permanent and only lasts for 2-3 months. Ignoring this divergence risks underestimating recession risks. Compared with China (growth of 5.2% in 2025), the United States' growth relies more on consumption and is vulnerable to confidence shocks.

Trump policy: stimulus and risk coexist

The Trump administration’s push for economic stimulus aims to “buy the midterm elections.” Measures include tax cuts, deregulation, foreign investment inflows and tariff checks. Finance Minister Scott Bessant said that the 2025 "pipeline laying" will take effect in 2026, and tax refunds of US$150 billion are expected to stimulate consumption. Commerce Secretary Howard Lutnick emphasized that factory construction and tariff revenue will drive growth.

However, uncertainty freezes business investment. The trade war has led to a decline in imports but also raised costs. A 43-day government shutdown (in 2025) weighed on fourth-quarter growth. The risks of the congressional midterm elections are high, Trump's approval rating has declined (among independent voters), and the Democratic Party may control the House of Representatives, making the president a "lame duck."

Analytical comments: Trump’s policies are good in the short term, but have high long-term risks. Supply-side economics supports tax cuts to stimulate investment, but the current high debt may exacerbate the deficit. Mundell's Impossible Triangle shows that under free capital flow, independent monetary policy and fixed exchange rates cannot have both. Tariffs could trigger retaliation and weaken exports. Historical experience (such as the Reagan era) shows that tax cuts initially increase growth, but the debt remains. Ignoring midterm election risks risks underestimating policy paralysis.

Federal Reserve Policy: Test of Independence and Prospects for Interest Rate Cuts

The Federal Reserve will maintain interest rates at 3.5%-3.75% in January 2026, but there are large internal differences. Chairman Jerome Powell’s term ends in May, and new chairman candidates (such as Kevin Warsh) will be influenced by Trump. Bessant led the search, criticizing the Fed for having too much power and hinting at tightening.

History shows that the Fed has never been truly independent. Founded in 1913 to stabilize banks, it was often subject to political pressure. Supported debt financing during World War II. After the epidemic, the balance sheet increased from 4.5 trillion to 9 trillion and is currently 6 trillion. Trump was dissatisfied with Powell's policies after appointing him, and the new chairman may push for aggressive interest rate cuts in 2026.

Federal Reserve meeting minutes showed that some officials supported further interest rate cuts if inflation meets expectations. The market expects one or two 25 basis point interest rate cuts in 2026. Powell said policy will be decided "meeting by meeting".

Analytical comments: The weakening of the Federal Reserve’s independence may distort the market. Hamilton's theory believes that the central bank should be independent of finance, but under the current debt pressure, the Federal Reserve has become a "debt buyer." Compared with history (such as the gold standard in 1900), the current situation has no hard anchor and is prone to distortion. Cutting interest rates could fuel inflation and weaken real incomes, contradicting Trump's affordability campaign. Investors should pay attention to the March meeting. If the employment data is bad, it may drop by 25 basis points.

USD Outlook: Depreciation Trend and Commodity Impact

The U.S. dollar index is forecast to drop to 92-98 in 2026, 5-10% lower than the current 94-97. Drivers include interest rate cuts, debt growth and trade uncertainty. Morgan Stanley predicts it will drop to 94 in the second quarter and rise to 100 by the end of the year. Cambridge Currency is expected to average 94-96, with a low of 92.

Depreciation is good for goods. The price of gold has exceeded 5,000 and is forecast to be 6,000 by the end of the year. The price of silver is 180, and the price of platinum is 3,400. Hard assets fill the gap between monetary cost and asset value.

Analytical comments: The depreciation of the US dollar is structural. Post-Bretton Woods, dollar hegemony relied on oil and reserve status, but debt eroded confidence. The Mundell model shows that loose policies lead to capital outflows. History (such as the 1970s stagflation) shows that a weak dollar pushes up commodities. Trump's weak dollar policy is good for exports, but it exacerbates inflation. The US dollar often appreciates during crises (100% correlation in the past 25 years), but if there is no major crisis at present, the probability of depreciation is high.

Gold price and hard assets: rising logic and outlook

The price of gold exceeded 5,000 due to debt, inflation and geopolitical risks. In 2025, platinum will exceed S&P by 20 times. Hard asset “buy the dip” currency distortions.

Forecast for 2026 is 6,000 gold, 180 silver, and 3,400 platinum. Stocks rose but lagged hard assets.

Analytical comments: As a safe-haven asset, gold has a signal problem similar to "turning on the neon light". The Austrian school believes that monetary easing distorts prices and gold restores its value. Compared to the stock market (which has extreme valuations), gold is more stable. J.P. Morgan predicts 5,055 by the end of the year and 5,400 by 2027. Investors should diversify and use hard assets to prevent inflation.

2026 Outlook: Opportunities and Risks

In 2026, GDP may be 5%, but the probability of a market downturn is high. The valuation is extreme, and 20% returns for three consecutive years are rare. Recession risks are delayed, but debt and fragmentation are amplified.

The mid-term elections may lead to policy paralysis. The integration of the Fed and finance creates a sustainable system but risks collapse.

Analytical comments: The probability is non-zero, and it is possible to continue the status quo. History shows that crisis panels are common, but the market has been on an upward trend for 15 years. Don’t go all-in on doomsday, insurance is necessary. The fourth turning ETF is a metaphor for the cycle, but statistics show that the returns in the fourth year are improbable.

Conclusion

The U.S. economy is facing a test due to the intertwining of debt, gold prices and policies. Hard assets like gold are "best friends". Investors need to be balanced, pay attention to data, and avoid extremes.