The US economy is still on cruise control, but the “check engine” light is glowing.

A flurry of key reports last Thursday showed that US growth has been slowing and by Friday, one closely watched indicator showed the economy may start to shrink in the near future. If the US consumer is the engine driving the economy, then some funky noises are coming from underneath the hood. So what gives?

Shop Till You Drop

First things first: Thursday’s gross domestic product report from the Commerce Department’s Bureau of Economic Analysis showed that US GDP increased at a 2.3% annualized rate in the last quarter of 2024, down from the 3.1% pace in the quarter prior. That came the same day as a National Realtors Association report showing home sales in January fell to an alarming low (and Trump 2.0’s promised tariffs are not likely to help turn things around). Also on Thursday: Weekly jobless claims data from the US Labor Department showed the largest spike in five months — and mass layoffs in the federal government still likely haven’t appeared in the data yet. Combined, the reports show broader economic distress may be brewing.

On Friday, the Atlanta Fed’s closely watched GDPNow reflected that distress starkly; the tool, whose growth estimates had declined steadily during February, now projects GDP will contract by 1.5% in the first quarter of the year. That’s a marked correction from the 2.3% growth the tool had projected just two days earlier, and, if it comes to fruition, would mark the US economy’s first quarterly contraction since the first three months of 2022.

US consumers, who account for roughly two-thirds of the country’s gross domestic product, are growing concerned:

• Last week brought the latest Consumer Confidence Index data from the Conference Board, released Tuesday, which showed the third straight month of falling consumer sentiment and the biggest month-to-month drop since August 2021.
• Per GDPNow, consumer spending is still expected to contribute positively to GDP growth in the first quarter, just at a lower rate than expected — with projections of a 1.5-point contribution to GDP falling to just 0.9 point in the latest data.

America’s well-off are powering the continued consumer spending. According to an analysis by Moody’s Analytics seen by The Wall Street Journal last week, the top 10% of American earners — or households making more than $250,000 per year — are now responsible for just a hair under 50% of all consumer spending; 30 years ago, the cohort contributed just 36% of total spending.

Trade Gap: The drop in consumer spending combined wasn’t the only drag on GDPNow’s growth indicator. The Commerce Department released data on Friday showing the US trade deficit increased 25% to $153.3 billion in January, which also weighed heavily. Import growth exceeded export growth, 11.9% to 2%. It seems everyone rushed to get their spending done before Trump’s tariffs on Mexico, Canada and China hit, which is now expected to happen on Tuesday.

There’s a porous international border, violent criminal syndicates, and a superpower calling for crackdowns. But we’re not talking about the part of the globe you think we are.

We’re referring instead to virtually lawless territory in Myanmar in the so-called Golden Triangle region. Whether you’ve heard of it or not, it’s become arguably the greatest hub for online scams in the world, costing Americans billions per year and leaving regional superpower China agitating for action. Officials announced progress last week, but many say it’s not good enough.

“Pig Butchering” in the Rainforest

Civil war broke out in Myanmar after a 2021 military coup, creating a power vacuum in parts of the country’s Kayin State, which has been filled by criminal syndicates and Myanmar militias. They’ve become so dominant that the country is now ranked number one on the Global Organized Crime Index, above cartel hubs Colombia and Mexico.

The criminal organizations are involved in your typical mafioso activities like drug trafficking and illegal gambling. But what makes them stand out are sprawling compounds of literal fraud factories amid the rainforests. Gangs lure people with false promises of work or business opportunities and then enslave them at these facilities. Victims are forced, under threat of torture, to carry out so-called “pig butchering” scams — long cons where they dangle promises of romance or investment opportunities to social media or dating-app users, tricking the unwary into sending money.

The UN estimates 120,000 people in Myanmar and 100,000 in Cambodia could be trapped in these facilities. The United States Institute of Peace estimated last year that criminal groups in Southeast Asia are pocketing $64 billion per year from scams, $3.5 billion of that from Americans. Now, officials say they’ve landed some significant blows against the gangs:

• Chinese nationals make up a large share of the human trafficking victims — Beijing has issued travel warnings in southeast Asia and a famous Chinese actor was abducted last month (he was later freed). China heralded a series of raids carried out last week alongside Thai and Myanmar authorities that freed thousands.
• Thai Prime Minister Paetongtarn Shinawatra said Friday that her country has also shut down 2 million bank accounts connected to the criminal networks. Earlier this month, she suspended electricity, fuel supplies and internet connections from her country to the border areas where scam factories operate: China’s Xinhua News Agency reported that Thai police said scam-related crime has since fallen 30% in Myanmar.

Untouched Kingpins: Thai opposition politician Rangsiman Rome, a prominent advocate for stronger crackdowns, told Reuters that he believes there could be as many as 300,000 people in the scam centers. “The empire of the scam is still there, we’re just shaking them,” he told the news agency, noting that major kingpins involved haven’t been toppled.

Call it the MAMMA movement: Make America Make Medicine Again.

While electric vehicle and AI-powering semiconductor manufacturing tend to get all the attention, there’s another reshoring renaissance quietly underway in the US: one for pharmaceuticals. Leading the charge is Eli Lilly, which last week announced a $27 billion investment in four different domestic manufacturing plants designed to help meet the rabid demand for its catalog of weight-loss drugs.

Just What the Doctor Ordered

Weight loss drugs aren’t the only pharmaceuticals to experience a shortage in the US. In fact, a record 323 drugs were experiencing shortages in the US in the first quarter of last year, according to the American Society of Health-System Pharmacists. The number included ADHD drugs like Adderall, treatments for cancer, and even generic drugs like amoxicillin and ibuprofen.

The deficiency is due to both record demand and supply chain snags, most of which happen outside the US:

• According to one study conducted by researchers at Johns Hopkins University, just 14% of the active pharmaceutical ingredients found in generic drugs are manufactured in the US; India, China, and Italy, meanwhile, have been top producers.
• Meanwhile, researchers at Washington University of St. Louis say the US has no manufacturing capacity for 83% of the most common ingredients in the top 100 generic drugs, which account for 90% of all medicines consumed.

Across the Aisle: Bringing the industry back to the US has become a bipartisan issue: In 2021, then-President Joe Biden issued an executive order calling for the reshoring of pharmaceutical manufacturing, pledging $2 billion for biotech and biomanufacturing initiatives. And last week, Eli Lilly CEO David Ricks announced the company’s US manufacturing investments while standing alongside Commerce Secretary Howard Lutnick — and made sure to tip his hat to the new big boss, calling Trump 1.0’s 2017 tax cuts “fundamental to Lilly’s domestic manufacturing investments.” Eli Lilly’s latest $27 billion plan brings its total investment in the US in recent years to $50 billion.