"That imbalance extends beyond markets. Roughly 70% of U.S. economic growth comes from consumer spending, yet most households live paycheck to paycheck. That demand picture has taken on a shape that analysts call K-shaped: while many families cut back on essentials, wealthier households continue to spend on travel, tech, and luxury goods-and they continued to do so in August. For now, the inflation recovery depends heavily on this dynamic remaining in fragile stasis."
"That skew has become increasingly obvious in markets. Just seven firms - Microsoft, Nvidia, Apple, Alphabet, Meta, Amazon, and Tesla - now make up more than 30% of the S&P 500's value. Their relentless AI capex is keeping business investment positive, even as overall job growth has slowed to a crawl. Goldman Sachs estimates AI spending accounted for nearly all of the 7% year-over-year gain in corporate capex this spring."
Unusually large AI-driven capital spending is concentrating economic activity among mega-cap firms and higher-earning households. Capital spending could reach $3 trillion by 2028 and has kept business investment positive despite slowing job growth. Approximately 70% of U.S. growth comes from consumer spending while most households live paycheck to paycheck, producing a K-shaped demand pattern where wealthier households sustain spending on travel, tech, and luxury goods. Seven firms now represent over 30% of the S&P 500's value. Goldman Sachs estimates AI spending accounted for nearly all of a 7% year-over-year rise in corporate capex this spring.
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