Economic review: A reality check

The current media discourse and punditry surrounding the U.S. economy often seems out of sync with reality. Many prognoses, based on flawed modeling, suggest an economy on the brink of a slowdown, with consumers supposedly facing a “cost wall” and resorting to unsustainable credit card debt. However, a closer look at the data paints a different picture.

The U.S. economy is in a period of stable growth, hovering between a 1.2–3 percent annualized rate. This suggests a strong foundation for sustained compounded economic growth, potentially reaching 3 percent annually. While inflation is a concern, it is not “out of control.” The Headline Consumer Price Index (CPI) for July was 3.1 percent, while Core CPI was 2.7 percent. This range is slightly higher than what many economists consider “reasonable,” but it’s not a runaway train.

Consumer behavior and economic health

The notion that consumers lack financial discipline and are addicted to debt is contradicted by recent data. While it’s true that consumer credit card debt saw a significant increase, it actually peaked in the fourth quarter of 2024. This suggests consumers are making deliberate choices to manage their spending and debt. Meanwhile, wage growth is at 3 percent—a rate that is roughly keeping pace with inflation when measured over a longer period, such as a year.

The industry’s focus on cost management and productivity, along with the benefits from recent federal tax legislation, has enabled consistent and repeatable free cash flow growth.

Sectoral strengths and challenges

Not all sectors of the economy are performing at the same level. The trucking industry, for example, is in a recession, primarily due to overcapacity rather than a significant shift in consumer behavior. This overcapacity actually has created a positive side effect for waste and recycling by improving the availability and pace of fleet replacements and correspondingly keeping maintenance cost under control.

The U.S. is currently facing a housing crisis marked by a structural supply shortage. The national housing market is short by at least 4.5 million units, a combination of single and multifamily homes. While affordability is a real issue due to high interest rates and increased construction costs, a primary limiting factor is labor constraints. Even if other issues were resolved, the pace of construction would be limited by a shortage of skilled labor.

The waste & recycling industry

The second-quarter 2025 earnings of waste and recycling companies demonstrate resilience in the face of these broader economic trends. Underlying municipal solid waste volumes remained positive and stable, with pricing strategies effectively outpacing inflation and driving operating leverage. Special waste volumes, excluding one-off events like natural disasters, were flat to slightly negative.

The current trucking recession has been beneficial to this sector, allowing for a more deliberate and cost-effective fleet replacement strategy. A younger fleet has lower maintenance costs per hour. Regulatory changes around truck emissions also lessen the urgency for prebuying vehicles in 2026 to avoid new engine designs, further benefiting the industry’s bottom line. Despite some commodity price volatility, the industry’s focus on cost management and productivity, along with the benefits from recent federal tax legislation, has enabled consistent and repeatable free cash flow growth. The earnings reports from the first half of 2025, particularly the second quarter, confirm this positive outlook.