While there's a popular narrative about a US manufacturing resurgence, the massive capital spending on AI contradicts it. By consuming a huge portion of available capital and accounting for half of GDP growth, the AI boom drives up the cost of capital for all non-AI sectors, making it harder for manufacturing and other startups to get funded.

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 is not broadly strong; its perceived strength is almost entirely driven by a massive, concentrated bet on AI. This singular focus props up markets and growth metrics, but it conceals widespread weakness in other sectors, creating a high-stakes, fragile economic situation.

The primary economic concern is not a cyclical recession but a structural slowdown in the economy's underlying trend growth. This is driven by long-term factors like restrictive immigration policies that impact labor supply and productivity, creating a persistent headwind even without a formal downturn.

Real consumer spending is up only 1% year-to-date (non-annualized), which annualizes to a weak 1.5%. This is a significant slowdown from the typical 2-2.5% growth in previous years, indicating that consumers are substantially pulling back their expenditures.

The AI buildout won't be stopped by technological limits or lack of demand. The true barrier will be economics: when the marginal capital provider determines that the diminishing returns from massive investments no longer justify the cost.

Despite AI hype, market valuations haven't reached dot-com era levels. This restraint is largely due to negative macroeconomic factors like trade wars, high interest rates, and a weak labor market, which are acting as a brake on otherwise rampant investor enthusiasm.

The massive capex spending on AI data centers is less about clear ROI and more about propping up the economy. Similar to how China built empty cities to fuel its GDP, tech giants are building vast digital infrastructure. This creates a bubble that keeps economic indicators positive and aligns incentives, even if the underlying business case is unproven.

The economy's apparent strength is misleadingly concentrated. Growth hinges on AI-related capital expenditures and spending by the top 20% of households. This narrow base makes the economy fragile and vulnerable to a single shock in these specific areas, as there is little diversity to absorb a downturn.