The reason that the so-called booming economy feels like a complete lie to most people is because the economy is bifurcated. There’s the economy for the rich, which is absolutely soaring, and the economy for everyone else, which is basically in a recession. The scary part is that the entire illusion of national prosperity is being propped up by one of the biggest financial bubbles we have ever seen.

This all starts with a deep split. The spending of the wealthiest 10% of Americans now makes up one third of the entire country’s GDP. They are responsible for nearly half of all consumer spending. Meanwhile, for the vast majority, things feel stagnant because they are. The national GDP number is a mathematical trick, buoyed by a few powerhouse states, while regions representing nearly a third of the nation’s economic output, like the Rust Belt, are in or near a recession. The reason for this divide is simple. The stock market gains you hear about on the news only benefit a tiny slice of the population. The top one percent own half of all stocks. The top ten percent collectively own nearly ninety percent. The bottom half of the country owns just one percent. So when the market hits a new high, it is overwhelmingly just the rich getting richer.

Now, let’s talk about that bubble. By the classic Buffett Indicator, which compares the total stock market value to the size of the economy, the US is in unprecedented territory. This indicator is now over 219%. To put that in perspective, it was only 138% at the peak of the dotCom bubble and 105% before the 2008 crash. This is the largest stock market bubble in US history.

But the real insanity is what’s inside this bubble. The market is being carried by a handful of tech companies, often called the Ten Titans. These ten firms represent just a tiny fraction of all public companies, yet they make up over 30% of the entire US stock market’s value. In recent months, they alone were responsible for over half of all market growth. The entire system is dangerously concentrated in a few names. The fuel for this run up is the artificial intelligence boom. But now, even the leaders of the AI revolution admit it is a bubble. Furthermore, recent studies show that 95% of corporate AI projects are failing, and the rest are making very little money. It is pure speculation that’s driving this frenzy.

The most critical part of this story is that this AI bubble is now masking a severe weakness in the real economy. The overall GDP growth number for 2025 looks okay, but a deeper look paints a different picture. One analysis found that investment in AI and information processing, a sector that is only 4% of the economy, accounted for a staggering 92% of all GDP growth in the first half of the year. Without the sugar rush of AI spending, the rest of the US economy grew at a near flat rate of just 0.1%. The real economy for most Americans is already on life support, and the AI bubble is the ventilator.

This sets up a perfect storm for stagflation, meaning a stagnant economy combined with persistent inflation. Prices remain high due to supply chain issues and trade policies, while the real economy struggles. To make matters worse, the AI boom is actively making inflation worse by consuming enormous amounts of electricity and driving up power costs for everyone. So we are left with a terrifying situation. A historic bubble concentrated in a few tech stocks is creating a mirage of prosperity, hiding a recession that most people are already living through. Everyone will suffer when this bubble inevitably pops.

  • limer@lemmy.ml
    5·
    7 days ago

    In my headcanon about the future of the USA, this is one part of the perfect storm that will make me eat at a soup kitchen.

    Another part includes the toppling of the Fed independence, and Trump setting interest rates to make the most money for the insiders. “Surprise! Interest rates lowered|rose today, experts are shocked”

    Then there are the tariffs, and the purges against immigrants. Raising the cost of an apple to 3$ per fruit.

    The results will be similar to 1990s Russia. And maybe that is their end game for the Trump administration. Because people can make a lot of money buying companies and land, like in Russia

    • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPM
      6·
      7 days ago

      I would posit that it’s actually going to be a lot worse than 90s Russia. The core reason boils down to built-in resilience, or the total lack thereof.

      When the collapse happened in USSR, life didn’t actually change that drastically for most. Housing was state-owned, so nobody got evicted. You just stayed in your apartment with your free rent. Public transportation was massive and designed to be maintainable with minimal resources, so it kept running, meaning people could still get around. There was already a culture of kitchen gardens, barter, and fixing things yourself because consumer goods were always scarce. You were used to making do.

      Now, flip that to the US where the entire society is built on a just-in-time, hyper-efficient, profit-driven model that is incredibly fragile. The housing market is dependent on mortgages, jobs, and property taxes. When the paychecks stop, the evictions start, and you get a massive flood of homeless refugees from the suburbs, which are completely car-dependent and unsustainable without fuel. American food system is a miracle of logistics that gets lettuce from California to New York in diesel trucks. Break that chain and the supermarket shelves are empty in three days. Most Americans don’t have a clue how to grow a potato.

      Then there’s the quality of goods problem. Soviet consumer products were crappy but built like tanks and designed to be repaired. The ones in the west are designed for planned obsolescence. When the global supply chain for new products snaps, people end up with useless and un-fixable junk. Americans are also in a worse shape physically. Trying to suddenly live a physically demanding, subsistence lifestyle would be very difficult for large swaths of the population.

      Finally, there’s the social fabric. Soviet families were often multi-generational and geographically close, providing a built-in support network. American families are atomized, spread across the country, and often barely tolerate each other during the holidays. In a crisis, you’re likely to be stranded among strangers. Add to that all the political divisions, and things start to look a lot like pre-civil-war Yugoslavia, it’s a recipe for things getting very ugly, very fast. The Soviet collapse was awful, but it was awful within a system that was already braced for hardship. The US collapse would be like a comfortable person who has never missed a meal suddenly being thrown into the wilderness with no tools or skills.

      • limer@lemmy.ml
        4·
        7 days ago

        I think you are correct overall, it will be like pigs to the slaughter. But I have two things to add:

        The first is that while people in bad situations mostly flounder, it opens up a very rapid series of social changes. Not all of them bad.

        The second is this is the first opportunity to organize socialism in the USA at a large scale. And future revolution will see this as its birth moment

            • eldavi@lemmy.mlEnglish
              3·
              7 days ago

              And long since the collapse will happen first w the people who experienced the least of the American dream; leaving the people in control trying to cling onto it desperately by pushing for harsher and harsher laws to “deal” w the throngs on homeless & desperate people.