Despite the firm strengthening of the US dollar yesterday, it was not linked to US reports, which proved quite ambiguous—positive signals from the housing market and the trade balance are juxtaposed with a worrying decline in small-business optimism, painting a picture of an economy under increasing pressure.

As always, the housing market provided a pleasant surprise. Existing home sales in May accelerated to their highest level in a year—4.17 million on an annualized basis. The median price rose by 1.3% year-over-year to $429,300, and the number of listed properties slightly increased to 1.55 million. The structure of buyers is indicative: first-time buyers accounted for 35% of transactions—the highest percentage since June 2020. This suggests that the market is gradually returning to a healthier, organic model of demand—despite mortgage rates remaining above 6% for the fourth consecutive year.

The trade balance also pleased. The April deficit shrank by 1.2% to $55.9 billion, slightly better than the consensus forecast of $56.1 billion. The main driver was oil exports—crude oil shipments increased by 60% over the month. The war with Iran and the closure of the Strait of Hormuz redirected global demand for American energy resources, and the US is actively taking advantage of this window of opportunity. Imports rose by 2%—primarily due to computers and semiconductors, reflecting the ongoing investment boom in data center construction.

As I noted earlier, the shadow over this generally positive picture is cast by the NFIB Small Business Optimism Index. In May, it fell by 0.6 points to 95.3—the lowest since October 2024. It is worth noting that after Trump's re-election, the index sharply soared to a six-year high in December 2024; however, it has steadily retreated since then. Now, all post-election optimism is effectively neutralized. Small businesses are a sensitive barometer of the real state of the economy: they are the first to feel rising costs, higher interest rates, and weakening consumer demand.

In aggregate, this data paints a picture of the American economy that is holding on, but with increasing difficulty. Large businesses and exporters are benefiting from the geopolitical situation, and the housing market has found a new equilibrium. However, small businesses—the foundation of employment and consumer activity—are losing confidence. Against the backdrop of today's anticipated May CPI, projected at 4.2%, and the first Federal Reserve meeting under Warsh's leadership next week, this combination of signals intensifies the central bank's dilemma: the economy is not broken yet, but it is cracking—and inflation continues to rise.