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.