On the one hand, the U.S. consumer is doing great, forming a bulwark against the threat of a recession.
On the other, the U.S. consumer can be counted on to carry on pressing the accelerator on his leased car until well after it is already in the ditch.
Data showing the economy expanding at a disappointing 1.2 percent annual rate in the second quarter illustrates the striking divergence between a robust consumer and the lagging remainder. Consumer spending grew 4.2 percent in the quarter but everything else is now in recession, with the non-consumption parts of the economy down 0.2 percentage point over the past year.
"If consumers were to wobble in the near-term, it would have profound negative implications for the overall economic outlook. This is why we see an elevated risk of recession, which we estimate to be roughly one in three," Joseph LaVorgna, economist at Deutsche Bank, wrote in a note to clients.
"There is simply not much else to cushion GDP growth should consumer spending falter, possibly due to an exogenous shock."
Consumption growth is, in a sense, a mile wide and an inch deep. Job creation remains solid but wage growth is still tepid, meaning that much of the spending is backed by easier and cheaper credit and the rising value of homes and financial instruments.
There are, remember, two Americas: one that spends at or above its income due to relative poverty and one much better off and with a much higher savings rate. A Federal Reserve study released in May found that nearly half of American adults could not meet an unexpected $400 expense, or would sell something or borrow to cover it.
So a bulwark, perhaps, but not one that will stand up to tough conditions.
Job growth, even as it has been at the lower end, is efficient stimulus because not only do the people who get the jobs spend the money, they spend all of it and very likely a bit more via credit. That works only so long as the jobs keep coming, which should give an insight into why the Federal Reserve has been so cautious about raising interest rates.
Job growth among the financially precarious forms a positively reinforcing cycle with consumption, but a fundamentally fragile one.