Gauging U.S. Consumer Health, Jobs Strength & Small Caps Boom

• Q2 GDP is tracking at 3%, with potential for slight upward adjustment due to stronger exports than imports.
• The labor market is resilient with significant job additions and stable unemployment, but real wage growth has slipped into negative territory, indicating consumer strain.
• Business investment and capital spending, primarily driven by AI CapEx, remain healthy and are offsetting some consumer fragility.
• Small-cap stocks (Russell 2000) are outperforming the Nasdaq, with this trend being backed by improving earnings fundamentals rather than just speculative bounces.

The discussion gauges the U.S. economic outlook for mid-2026, noting Q2 GDP tracking at 3% with potential upward revision due to strong exports. While the labor market remains resilient, real wage growth has turned negative, signaling consumer strain. Strong business investment, particularly in AI CapEx, is a key driver, and small-cap stocks are showing fundamental outperformance over the Nasdaq.