Despite strong nominal growth and a buoyant stock market, consumer sentiment is at historic lows. This cognitive dissonance, where people feel things are unraveling amid objective prosperity, is a condition observed before major societal revolutions and technological shifts.
While the long-term productivity benefits of AI are uncertain, the short-term economic impact is clear. Building massive data centers requires immense physical resources like steel and energy, creating an immediate inflationary boom that contributes to an overheating economy in 2026.
The growing importance of the informal "gig" economy and potential distrust in official statistics are characteristics of emerging markets. Therefore, analytical methods used for those economies, like relying on hard data like tax collections instead of surveys, are becoming more appropriate for understanding the U.S.
Official surveys like PMI or household data can be flawed, delayed, or politically influenced. Daily Treasury tax collections provide a real-time, unbiased measure of nominal growth and economic activity, as it reflects actual cash income being earned and is difficult to manipulate.
Administrations frequently appoint figures known for a specific ideology to implement the exact opposite policy. This pattern suggests institutional pressures override personal beliefs. For example, Fed chair candidate Kevin Warsh, despite his hawkish reputation, will likely cut rates to align with administration goals.
Simply engineering high nominal growth while suppressing interest rates only inflates asset prices, worsening inequality. A successful, sustainable deleveraging, as described by Ray Dalio, must also include active redistribution through higher taxes on top earners and corporations to rebalance the economy.
Strong nominal growth has resulted in a surge in tax receipts, up over 10% on personal income. This provides the government with more fiscal capacity than is widely perceived, making further stimulus measures—like direct checks to voters ahead of midterms—a highly probable scenario.
By analyzing non-withheld income tax collections (approx. $1 trillion), and assuming a 20% tax rate, one can infer a $5 trillion underlying tax base for the gig economy. This sector is expanding by 10% annually, a significant growth engine missed by traditional economic surveys.