Federal Reserve Chairman Kevin Warsh pulled back the curtain this week on an economy making more progress than people feel.
Gallup’s Economic Confidence Index stood at minus 31 in July, and two-thirds of people said conditions were getting worse. Yet consumers continue to spend, workers are holding on to their jobs, and businesses are investing heavily in the technology and productive capacity that will shape what comes next. People may feel uncertain, but they are not acting defeated.
Warsh called the economy’s resilience “impressive” after the Federal Reserve held interest rates steady. He pointed to solid growth, job gains keeping pace with the workforce, and an unemployment rate that has changed little, even as inflation remains above the Fed’s 2% goal.
Most coverage will focus on the Fed’s next move. The more consequential story is what businesses, workers, and consumers are already doing.
Warsh called business investment “the most striking feature of the economy.” In the AI-related category of high-tech equipment and software, the most recent data showed spending growing nearly 20% over the past four quarters. Artificial intelligence, data centers, equipment, and software are not merely attracting capital. They are expanding America’s productive capacity.
Capital investment is confidence made visible. A company does not buy a machine, install new software, expand a facility, or equip employees with AI tools because its leaders have surrendered to uncertainty. It invests because they believe their people can produce more, serve more customers, and create greater value tomorrow.
The benefits extend far beyond corporate balance sheets. Better equipment helps a manufacturing employee produce more in an hour. New technology enables a contractor’s small team to compete for larger projects. Greater efficiency helps a family-owned business accept another order, enter another market, or create another job.
Investment drives productivity. Higher productivity helps businesses manage costs, raise wages, compete more effectively, and grow through disruption. It transforms resilience from the ability to withstand uncertainty into the capacity to create what comes next.
That progress is easy to miss. Retail and food-service sales in June were 6.7% higher than a year earlier, although that figure was not adjusted for price changes. Job gains have kept pace with the workforce, and unemployment has changed little. These numbers do not describe an economy without problems. They reveal underlying strength that is easily obscured when every development is viewed through the lens of the Fed’s next rate decision.
Warsh offered a better perspective. Markets, he said, are learning to “play the ball, not the referee.” The message extends beyond Wall Street. Business leaders create growth by focusing on customers, employees, investment, and opportunity, not by trying to anticipate every move in Washington.
America has seen that pattern before. In the early 1980s, the country emerged from punishing inflation, high interest rates, and back-to-back recessions. Families are still worried about prices, mortgages, and jobs. Businesses still faced risks they could not control.
People moved forward anyway. Entrepreneurs started companies, established businesses invested in new equipment and technology, and workers developed new skills. Those decisions helped power the long expansion that followed the 1981-82 recession.
Progress did not wait for confidence to return. Confidence grew as people created progress. Today’s technologies are different, but the economic principle remains the same: Private investment expands productive capacity, and greater productivity creates the foundation for higher wages, stronger businesses, and durable growth.
Not everyone is benefiting equally. Prices remain too high, housing is too expensive, and many capable people struggle to find the right jobs. Recognizing economic progress does not require ignoring those realities. It requires understanding how that progress can reach more people.
Washington should protect investment incentives, remove unnecessary regulatory barriers, and provide stable rules for long-term decisions. Government should create room for growth, not try to direct it. Businesses, entrepreneurs, and workers can do the rest.
Economic growth is often reduced to interest rates, forecasts, and government reports. The real economy lives in the entrepreneur buying equipment, the employee learning a new skill, the small-business owner taking a calculated risk, and the business leader investing in what comes next.
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Those decisions produce greater productivity, better jobs, higher wages, and stronger communities. That is how economic progress reaches the real lives of real people.
Warsh pulled back the curtain on an economy doing more than enduring uncertainty. Growth will not wait for every risk to disappear or every confidence survey to turn positive. It is already taking shape wherever people are putting capital, technology, and talent to work.
Dan Varroney is an economic growth strategist, founder and CEO of Potomac Core, and author of Rethinking Economic Growth.