Ahead of the midterm elections, economist Natasha Sarin and Bulwark editor Catherine Rampell examine the strange disconnect between how the economy is performing and how Americans feel about it. The central question is how much responsibility President Donald Trump bears for the current state of the economy, and how much of the problem runs deeper.
To start, Rampell points to the S&P 500, which has hit a series of records. She argues that this surge is largely a story about artificial intelligence. Despite high interest rates, trade wars and an active war, the A.I. sector has remained largely insulated. Normally, high interest rates would weigh on equities, but enthusiasm around A.I. has kept the market climbing. Rampell notes that roughly 45 percent of the S&P 500's market capitalization is now concentrated in A.I.-linked stocks, a historically high level of concentration.
Rampell also points to capital investment. Relative to the overall size of the economy, the amount of money flowing into new infrastructure build-out is at a level not seen in a long time. Whether this represents a boom or a bubble remains a topic of endless debate.
The conversation between the two economists highlights their disagreement over how much of the economic picture can be attributed to Trump's policies versus broader structural forces. Their discussion underscores why voters' perceptions of the economy may not match headline market numbers.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing