As Americans prepare to cast their votes, the economy appears to be booming. With growth averaging nearly 3 percent for nine consecutive quarters, the United States is seeing substantial foreign capital inflows, helping push its share of the global stock market index to an unprecedented 60 percent. However, despite these indicators of economic strength, there is a palpable disconnect between the numbers and the sentiment on the ground. A deep-seated economic pessimism permeates the electorate, driven by wealth inequality, rising costs of living, and an economic structure that increasingly benefits the wealthiest individuals and largest corporations.
At first glance, the U.S. economy is outperforming, sustaining an impressive growth rate that has caught the world’s attention. Inflows of foreign investment have helped push the U.S. stock market’s global share above 60 percent, a milestone that underscores investor confidence in America’s financial landscape. Yet, for many Americans, this boom is illusory. Economic gains have become increasingly concentrated among the wealthiest citizens, who drive much of the growth through discretionary spending.
Rising stock prices and robust consumer spending may present a picture of prosperity, but this image conceals the brittleness underlying the economy. According to research from Oxford Economics, spending among the wealthiest Americans contributes disproportionately to growth, with the top 20 percent of income earners accounting for 40 percent of all spending. In contrast, the bottom 40 percent account for just 20 percent of spending. This spending gap is the widest on record and is predicted to widen, leaving average Americans struggling to afford basic necessities, much less luxury goods and services.
For the wealthiest Americans, the past decade has brought massive financial gains. With booming markets, U.S. wealth increased by $51 trillion in the last ten years. Millennials, particularly affluent ones, have benefited significantly, capturing a notable share of this windfall. Yet, for the average American, wealth growth has stagnated, and millennials in middle- and lower-income brackets have struggled to build comparable financial security. This disparity has widened the generational wealth gap, sparking tensions between young and old and even among millennials themselves.
For most Americans, essential expenses like food, housing, and healthcare consume the majority of their income. Discretionary spending—on travel, dining, and entertainment—is increasingly out of reach for those outside the highest income brackets. According to recent surveys, consumer confidence has not rebounded evenly since the pandemic. Confidence among the wealthiest third of Americans has soared, while optimism remains weak among middle- and lower-income groups.
The divide is growing, not just in spending habits but also in outlook and expectations. While affluent consumers have seen substantial returns on investments, including real estate and stock portfolios, middle-income and lower-income households have seen little of this financial benefit. Consequently, they approach the economic future with wariness and often outright pessimism.
The U.S. stock market’s remarkable gains have been driven by the outsized success of its largest corporations. Today, the top 10 companies account for 36 percent of the stock market’s total value, a peak that hasn’t been reached since data collection began in 1980. This concentration of corporate wealth has widened the gap between the largest firms and smaller companies, where uncertainty is high and confidence remains low.
For small businesses, the economic landscape is especially challenging. Rising interest rates and inflationary pressures have increased operational costs, and many small business owners worry about their future prospects. Surveys indicate that small business confidence is at levels usually seen only in recessions, reflecting concerns about profitability, debt, and competition from large corporations.
Many analysts argue that dominant tech companies are a net positive for the economy, spurring growth, justifying record-high stock valuations, and attracting substantial foreign investment. However, while these tech giants grow larger and wealthier, smaller businesses, the traditional backbone of the U.S. economy, face unprecedented challenges. According to Oxford Economics, this dynamic will likely persist, with smaller firms unable to compete with the efficiencies and capital access of their larger counterparts.
Unlike previous economic booms, which were primarily financed by rising private sector debt, this current growth cycle has been fueled by an unprecedented surge in government borrowing. In the past decade, the U.S. government deficit has more than doubled, now exceeding 6 percent of GDP. Public debt has increased by $17 trillion, matching in just a decade what it previously took 240 years to accumulate.
Historically, government debt has been tied to corporate profits. This relationship, known as the Kalecki-Levy equation, has held since 1908, and recent data show that rising deficits have indeed bolstered corporate earnings. With fiscal policy driving profits, both political parties have largely set aside concerns about the rising deficit, tacitly accepting a “borrow and spend” approach as foreign capital floods into U.S. markets.
This dynamic, however, may have limits. Although the U.S. has been shielded from the fiscal constraints that have affected other countries, thanks to strong demand for the dollar, no country is immune to the consequences of ballooning debt forever. Economists warn that if government borrowing continues at its current pace, the U.S. could face rising interest rates, reduced investor confidence, and eventually a debt crisis reminiscent of those seen in other advanced economies.
In the zero-interest-rate environment that followed the 2008 financial crisis, U.S. assets became attractive to foreign investors, leading to a significant inflow of foreign capital. In the 2010s, foreign investors poured approximately $30 billion annually into U.S. stocks. This figure is expected to reach $350 billion this year, underscoring the U.S. as a global safe haven.
While these investments have buoyed U.S. markets, they come with risks. The post-zero-interest-rate environment has awakened “bond vigilantes”—investors who punish countries with high debt levels by demanding higher yields or pulling out of markets. Although the U.S. has largely escaped this trend due to its currency’s global dominance, no economy is impervious to financial pressures indefinitely. The reliance on foreign capital to maintain economic stability is a precarious position, particularly if the dollar’s desirability wanes or investor sentiment shifts.
The U.S. economy’s reliance on government borrowing and foreign investment has fostered a gilded age where prosperity is concentrated in a select few while average Americans struggle. With rising deficits propping up economic growth and the stock market, the risk of a downturn looms large. Historically, empires have faltered when they could no longer finance their own growth, and some economists caution that the U.S. may be heading down a similar path if it continues its dependency on debt.
Should the economy experience a downturn, it will likely hit low- and middle-income Americans hardest. Already, many families are unable to keep up with the cost of living, with rising credit card debt and homeownership out of reach for much of the population. An economic shock could exacerbate these challenges, pushing many into financial precarity.
In a political landscape where economic performance often dictates electoral outcomes, the current paradox is striking. Despite robust economic indicators, voter pessimism is high. Polls reveal that many Americans feel their financial security has not improved despite years of growth, and concerns about wealth inequality, corporate concentration, and rising living costs have eroded faith in the economy.
A significant portion of Americans now view discretionary spending as a luxury, with limited disposable income available after essential expenses. The affluent, buoyed by stock market gains and asset appreciation, may feel optimistic, but for a large share of the population, financial optimism remains elusive.
As Americans head to the polls, the economy’s future trajectory hangs in the balance. Regardless of which party wins, the next administration will face the monumental task of navigating an economy shaped by unprecedented government debt, extreme wealth inequality, and corporate concentration. Whether this path will lead to sustained prosperity or a painful reckoning remains uncertain, but the stakes are clear.
In the coming years, policymakers will need to address the structural imbalances in the U.S. economy if they hope to foster long-term stability and a more equitable distribution of wealth. This task will require difficult decisions about spending, taxation, and regulation. For now, America’s economic growth remains, in many respects, an illusion—strong on paper but fragile for the millions of voters who continue to struggle amid record-breaking growth.
As Americans cast their ballots, they do so with the knowledge that the current growth may not benefit them. In an economy where wealth is concentrated, costs are high, and government debt is soaring, many voters are skeptical about the country’s direction. For all its strength, the U.S. economy may be gilded rather than golden, with cracks already showing beneath its shiny surface.
