The disconnect between strong GDP data and public dissatisfaction (the 'vibe-cession') is because wealth gains are concentrated at the top while median outcomes worsen. This K-shaped dynamic is politically unsustainable, forcing politicians away from supply-side policies and toward more populist, and often inflationary, measures.

While top-line GDP figures appear strong, the US labor market has been in recession since mid-2024. The key question for 2026 is whether the economy can resolve this underlying weakness without it surfacing and triggering a broader downturn, a risk that intensifies if the stock market stumbles.

Recent job growth is overwhelmingly concentrated in healthcare services (83% of new NFP jobs) for an aging population. This, combined with an AI capex bubble, reveals a non-dynamic, 'K-shaped' economy where 'Main Street' stagnates and growth depends on narrow, unsustainable drivers.

The US economy's perceived strength is fragile because it rests on a dangerously narrow foundation. Job growth is concentrated in healthcare, stock market gains are driven by a handful of AI giants, and business investment is similarly focused. This lack of diversification makes the economy vulnerable and fuels public anxiety.

The U.S. economy can no longer be analyzed as a single entity. It has split into two distinct economies: one for the thriving top tier (e.g., AI and tech) and another for the struggling bottom 60%. The entire system now depends on spending from the rich; if they stop, the economy collapses.

Large-cap tech earnings are hitting record highs, driving stock indices up. Simultaneously, core economic indicators for small businesses and high-yield borrowers show they have been in a recession-like state for over a year, creating a stark divergence.

While large-cap tech props up the market, ADP employment data shows the small business sector has experienced negative job growth in six of the last seven months. This deep divergence highlights a "K-shaped" economy where monetary policy benefits large corporations at the expense of Main Street.

With the top 10% of earners accounting for half of all consumer spending, the U.S. economy has become dangerously top-heavy. This concentration creates systemic risk, as a stock market downturn or even a minor shift toward caution among this small group could trigger a sharp recession, with no offsetting demand from the rest of the population.

Aggregate US consumer strength is misleadingly propped up by the top 40% of upper-income households, whose spending is buoyed by appreciating assets. This masks weaknesses among lower- and middle-income groups who are more affected by inflation, creating a narrowly driven economic expansion.