The US economic boom is a mirage

As Americans head to the polls, the U.S. economy appears remarkably robust. With nearly 3% average growth over the past nine quarters, the country has attracted substantial foreign investment, pushing its share of the global stock market index to an unprecedented 60%+. Yet, despite these glowing indicators, many voters feel pessimistic about their financial futures.

The disconnect lies in the nature of this growth, which largely benefits the wealthiest consumers and major corporations. The perceived prosperity is uneven, fragile, and heavily reliant on government spending and borrowing. While global observers admire the resilience of U.S. consumers, the reality is that many Americans struggle with rising housing costs and increasing credit card debt. The wealthiest 20% of the population now account for 40% of consumer spending, while the bottom 40% contribute just 20%. This record-breaking disparity reflects an economy where essentials consume most household budgets, leaving little room for discretionary expenses like travel or dining out.

Optimism, like discretionary spending, is becoming a luxury for the affluent. Confidence, which plummeted during the pandemic, has rebounded sharply for the wealthiest third of consumers but remains muted among lower-income groups. Wealth gains over the past decade—an estimated $51 trillion fueled by surging financial markets—have overwhelmingly favored the richest Americans. Even within younger generations, disparities persist, as wealth increasingly concentrates among affluent millennials, exacerbating divisions not only between generations but also within them.

The U.S. economy is increasingly gilded, with a dazzling surface masking deeper vulnerabilities. Corporate dominance is a striking example: the top 10 companies now represent 36% of the stock market's capitalization, the highest since 1980. The gap between the most valuable U.S. stock and those in the bottom quartile has ballooned, from 200 times 10 years ago to 750 times today—the widest divide since the 1930s.

This concentration of power breeds anxiety among smaller players. Small businesses report historically low confidence levels, with fears about the broader economy and their survival running high—conditions rarely seen outside recessions.

For many analysts, dominant tech giants symbolize U.S. economic strength, driving growth, sustaining high stock valuations, and attracting massive foreign investment. In the 2010s, foreigners invested around $30 billion annually in U.S. equities; this year, that figure is projected to soar to $350 billion.

Traditionally, economic booms are driven by rising private-sector debt, with government borrowing ramping up later to stabilize downturns. This time, the government is taking the lead, with deficits doubling over the past decade to exceed 6% of GDP. Public debt has skyrocketed by $17 trillion in just 10 years, matching the increase accumulated in the 240 years following U.S. independence. This unprecedented level of borrowing underscores the fragility of an economy where growth increasingly depends on public sector intervention.