Forget the recession fears—there’s growing evidence the U.S. economy might actually be at risk of overheating. Here’s why:
🔹 Money Supply Is Exploding
U.S. M2 money supply grew by $1.65 trillion in 2025—the largest jump since 2021. Bank lending is accelerating, injecting liquidity even with tight Fed policy. If money keeps moving faster, inflation could reignite.
🔹 Productivity Is Surging—But It’s a Double-Edged Sword
AI and tech adoption are boosting output per worker, lowering labor costs and temporarily cooling inflation. However, this could fuel more investment and spending in the short term, adding inflationary pressure.
🔹 The “Wealth Effect” Is Driving Demand
Record household wealth—concentrated in the top 10%—is sustaining nearly half of all consumer spending. Rising asset prices mean the wealthy keep spending, masking underlying economic fragility.
🔹 Weak Labor Data Doesn’t Mean Slack
Despite cooling job markets and rising insolvencies, the economy may still overheat due to strong liquidity, productivity gains, and concentrated spending power.
🔹 Today’s Weakness Could Fuel Tomorrow’s Overheating
If the Fed cuts rates amid already rising money supply and capital spending, it could pour fuel on an economy already primed to run hot.
Bottom Line:
The real risk may not be a slowdown—but an economy heating up under the surface, driven by money growth, tech productivity, and wealth-fueled demand.
