Corporate profits: U.S. corporate profits reached their second-highest quarterly level on record in Q1 2026, a milestone driven largely by the AI and data center buildout that shows no signs of slowing. AI infrastructure spending is supporting the broader economy, and the strength has been broad-based across technology, semiconductors, and cloud platforms.
The asterisk? This profit boom is arriving alongside inflation that is still biting household budgets, and the gap between what companies earn and what workers take home is drawing attention across the political spectrum.
In our view, strong earnings are a real reason markets have held up better than expected this year, and they support staying invested. We’re also realistic that profit margins at these levels tend to normalize over time. We’re not banking on the good times rolling forever, but we aren’t of the belief that there is any imminent reason to panic either.
New Fed Chair, same interest rates: The Federal Reserve held its benchmark interest rate steady at its June meeting. This meeting was the first one presided over by new Chairman Kevin Warsh, who was appointed by President Trump to succeed Jerome Powell. With inflation still well above the Fed’s 2% target, driven largely by energy prices tied to the Iran conflict, most economists expect the Fed to remain on hold through the end of the year.
The change in leadership adds some uncertainty while markets get a read on Warsh’s approach. What isn’t changing anytime soon is the underlying reality: rates are staying elevated. If you have variable-rate debt or a significant financial decision on the horizon, that’s worth a conversation.
The K-shaped economy: Equifax released its Q1 2026 U.S. Consumer Credit Trends in late May, and the headline number is hard to ignore: total U.S. consumer debt hit an all-time high of $18.19 trillion. More telling than the total, though, is who is driving the growth. Lower income households are increasingly relying on credit cards not as a financial tool, but as a necessity for managing rising costs of living, a dynamic reflected in an 18.6% surge in new subprime bankcard accounts over the past year.
Student loan delinquencies have also risen for four consecutive months, and rising lender write-off rates suggest the financial stress that built up over the past year is now coming due.
The K-shaped economy, where things look great at the top and strained at the bottom, is showing up clearly in the data. This matters for the broader economy because consumer stress at scale eventually flows into slower spending and wider financial pressure. It also reinforces why your specific financial plan matters more than the headline economy. The two can look very different.