Wobbly Stools? Another Inaccurate Metaphor for US Economic Growth

Analogies and metaphors are always treacherous rhetorical devices, but they draw economists like moths to a flame.^[i] Last year, it was the K-shaped economy, with high-income households ascending while everyone else tanked, even though that wasn’t an accurate picture. This year, that metaphor has folded into another: Allegedly, the US economy rests on a handful of … one-legged stools. It is a metaphor so flimsy that it falls over as soon as you poke it, but maybe that is part of the fragility it attempts to convey? At any rate, its prevalence suggests sentiment has cooled somewhat, helping extend this bull market’s wall of worry.

Entering the year, sentiment toward US stocks looked pretty toasty. Despite lagging non-US stocks, in absolute terms the S&P 500 was cruising to a third straight solid year in dollar terms, economic data delayed by the government shutdown looked good and corporate earnings were rolling. Expectations weren’t outlandish, but serious optimism was commonplace. But then came market volatility, geopolitical rumblings, the alleged “Sell America” fears hitting the US dollar, Software’s problems, AI dread and more, helping take sentiment down a peg. Alongside this, economic fears resurged, which is where these malformed stools came in.

We aren’t carpentry experts, but in general, the minimum number of legs a piece of furniture requires to stand is three. Only two, and you need perfect balance and weight distribution. Only one, and splat. Yet this is the metaphor people seem to have chosen for a job market purportedly propped up by healthcare hiring. And business investment that allegedly rests on data center construction. And consumer spending that supposedly rests on high-income consumers. Each of these, supposedly, is a one-legged stool, and these one-legged stools are the only reason aggregate US economic data are ok.

Reviewing all this, we found something funny: They all kind of debunk one another. Think about it. If only Tech companies are spending money and driving growth right now, then why is Health Care the only sector hiring? And if this sector is the only one creating jobs, given its average weekly compensation is rather middling, then where are all these ascendant high-income folks coming from? And if high earners are driving growth, then why are Luxury Goods stocks—theoretically their favored targets—down over the past year while the broad market is up?

It is easy to look at a single dataset, cherry pick an interesting nugget and run with it. But that doesn’t make the conclusion or logical approach correct. To get a real sense of the US economy, you must look at the totality of the data. Tomorrow’s Q4 GDP report will give us a nice high-level look, but we already have plenty to go on from narrower sources to show growth is broad-based.

For instance, yesterday we got durable goods orders for December 2025 and industrial production for January 2026. Manufacturing output rose for a third month straight in January, up 0.6%.^[ii] That may not be labor-intensive, given how automated production has become over time, but it isn’t home health assistance, and it isn’t only data centers. Production rose across all categories of durable goods, including furniture, transport equipment and heavy machinery as well as electrical components. In the realm of non-durables, chemicals, rubber products and paper grew, offsetting declines in textiles and clothing. And things look strong from here. Core capital goods orders (which exclude defense and aircraft), which previews the Equipment category of business investment, are now up six straight months through December, one of their most consistent stretches in years. There, too, data centers contribute but aren’t the whole story, given the preliminary report shows a broad-based rise.

Meanwhile, over in services—the vast majority of the US economy—growth also looks broad-based. Healthcare was just 1 of 11 subindustries reporting higher output in January, per the Institute for Supply Management’s Services Purchasing Managers’ Index (aka the ISM PMI). In the forward-looking new orders component, healthcare was 1 of 10 industries reporting growth. The only industries declining in both categories were transport and warehousing, arts and entertainment and the catchall “other services.” Those are isolated weak pockets. The services stool has so many legs, it would be … a really weird-looking stool.

So it looks to us like people are looking for reasons to gloomy, not reasons to be sunny. That hints strongly at lingering skepticism, helping keep sentiment in check. Expectations are ratcheting down, helping keep positive surprise easy enough to achieve. It is bad news for those of us allergic to bad metaphors but good news for stocks, whose wall of worry has some new bricks.