The Journal. — "It's Almost 2026. How's the Economy?"

Date: December 19, 2025
Hosts: Ryan Knutson & WSJ Economic Team
Produced by: The Wall Street Journal & Spotify Studios

Episode Overview

This end-of-year installment of The Journal. assesses the health and peculiarities of the U.S. economy as 2025 comes to a close. Host Ryan Knutson is joined by Wall Street Journal economic reporters Gene Whalen, Justin Lehart, and Rachel Wolfe, who provide a nuanced, at times skeptical, look at where things stand: uncertainty, rising inequality, a red-hot stock market, and shifting consumer and workforce behaviors. The team breaks down manufacturing, tariffs, labor market "vibes," tech-fueled stock surges, and what to watch in 2026.

1. State of the Economy—Three Words (00:37–00:55)

• Gene Whalen: "Uncertain."
• Justin Lehart: "Meh."
• Rachel Wolfe: "Asymmetrical."
• "Based on those answers, uncertain, meh, and asymmetrical. I'm starting to get the impression that you guys think it's not such a great economy right now." — Ryan Knutson (00:55)

Key Insight:
The economic experience is highly divergent—great for some, rough for others, particularly young people and those without substantial wealth or assets. The team references the "K-shaped" economy: prosperity for the upper segment, struggle for the lower.

Notable Quote:
"It really depends where you're sitting. For older people, for people with more savings who own their homes, it's a great time... But people on the lower end of the scale, things for them are looking worse." — Gene Whalen (01:05)

2. Tariffs and the Manufacturing Question (04:04–06:51)

• Trump administration imposed new tariffs in spring 2025, aiming for a "manufacturing renaissance."
• Fears of severe inflation and shortages have not materialized; price increases have been "far more mild" than anticipated.
• Companies and importers have found workarounds (rerouting through Southeast Asia, exempted products, etc.).
• Little evidence that tariffs have brought significant manufacturing jobs back to the U.S.

Notable Exchanges:

• "What we've actually seen... hasn't fed through to prices as much as everyone was expecting." — Gene Whalen (04:27)
• "It's not. No. I have not seen evidence of broadcast reshoring... in such quantities that we've seen the revival of US manufacturing..." — Gene Whalen (06:00)
• "The US has been losing manufacturing jobs this year still, despite this." — Justin Lehart (06:13)
• "It feels a little bit like the boy who cried wolf. I don't know if President Trump is the boy or economics reporters are the boy for saying it was going to be really bad and then it turned out not to be that bad." — Rachel Wolfe (06:51)

3. Inflation: Still Here, but Down (07:03–08:13)

• Tariffs ticked up inflation in summer, but it has since edged down to 2.7% (from 3% in September).
• Federal Reserve has cut rates three times, signaling reduced inflation anxiety.
• Real-world prices remain elevated—consumers persistently notice and resent it.

Notable Quotes:

• "People notice the prices of things that go up a lot and they don't notice it so much when they go down... People just, they're so ticked off about prices now." — Justin Lehart (07:40)

4. The Labor Market: Cooling, Confusing, and "A Vibes Story" (08:13–13:56)

• Unemployment rate has risen to 4.6% (highest in four years), though data accuracy is debated (possible government overstatement).
• Growth limited to healthcare/social assistance; most other industries stagnant or shrinking.
• CEOs blame/credit AI for layoffs and hiring hesitancy, even as direct impacts are elusive.
• General worker frustration: reduced job mobility, especially among young workers.
• Rise of "one-way interviews" (applicants talking to screens/AI instead of humans) adds to disillusionment.

Notable Quotes:

• "AI isn't necessarily like replacing a lot of jobs already. But I think that a lot of CEOs... believe deeply in what AI could mean... and that makes them more willing to let people go..." — Justin Lehart (09:30)
• "There's just kind of been a growing distrust between employees and employers." — Rachel Wolfe (10:12)
• "[It's] a vibes thing in the sense that people are comparing things to how it was a few years ago when the job market was on fire..." — Gene Whalen (11:16)
• "Recent grads... one of the weakest spots in the job market... unemployment remains relatively low on the whole, it's really increased among the youngest workers." — Rachel Wolfe (12:41)
• "A lot of the process has been automated... young people... never have contact with a hiring manager or human. And so that also feels very soulless and discouraging for them." — Gene Whalen (13:49)

5. The Stock Market: Up and to the Right (16:00–18:12)

• U.S. markets set repeated records; the "Magnificent Seven" tech companies (Microsoft, Apple, Nvidia, etc.) account for huge share of gains.
• Nvidia is the first $5 trillion company; S&P returns (over 60%) driven mostly by these top firms.
• Stock market success is largely benefiting those already invested, especially the wealthy.

Notable Quotes:

• "Seems nothing can hold back the bulls on Wall Street. US Markets setting record after record high." — News clip (14:26)
• "So called Magnificent Seven make up nearly 30% of the S&P's market value... accounted for more than 60% of returns..." — Justin Lehart (16:18)
• "We know that people who own stocks are feeling really good about the economy." — Rachel Wolfe (16:41)

6. Stock Wealth Drives Spending—but Not for Everyone (17:14–19:17)

• Stock market gains are spurring increased high-end consumer spending.
• Real estate agents notice luxury property buyers emboldened by stock performance.
• Consumer spending is at a record ($1 trillion expected this holiday season), but mainly fueled by affluent consumers.

Notable Quotes:

• "People are kind of using it as their savings accounts... it makes them more willing to spend otherwise because they're like, look, I'm doing well." — Rachel Wolfe (17:20)
• "The bulk of consumer spending is coming from a small group of people at the very top of the economic ladder." — Ryan Knutson (18:12)
• "We're seeing more companies target their services specifically to wealthy consumers... there's no kind of mass middle class anymore." — Rachel Wolfe (18:32)

Warning Signs:

• Much of this prosperity is asset-based; a market downturn could quickly change consumer behavior.
• "Everyone's worried the AI bubble will burst and... a lot of stocks in this space [could] fall." — Gene Whalen (19:17)

7. 2026: The Key Questions Ahead (20:05–21:37)

• Gene Whalen: How will housing rates and the “locked-in” pandemic mortgage crowd affect mobility?
• Justin Lehart: The political and economic ramifications of intensifying inequality—including within the upper class.
• Rachel Wolfe: How will declining birth/marriage rates and delayed family formation among young people affect economic trends and spending?

Memorable Closing Exchange

• "Thank all of you so much. This was awesome. I feel smarter than I did an hour ago." — Ryan Knutson (21:37)

Conclusion

Overall Tone:
Cautious, skeptical, and reflective. The experts paint a picture of generational and socioeconomic divides—with resilience and prosperity for some, uncertainty and discouragement for others. Asset markets boom, but underlying growth is patchy, and the gap between the 'haves' and 'have-nots' remains a dominant theme heading into 2026.

For Further Listening:

You can email your thoughts or questions about the economy to The Journal at thejournalhj.com.