In the US, a wealth boom and a price shock collide

The United States is currently experiencing a dual economic phenomenon, where a wealth boom fueled by the artificial intelligence (AI) market boom collides with a price shock that is causing significant challenges for the majority of households. While the AI technology revolution is driving substantial investment and contributing to stock market gains, these benefits are concentrated among the wealthiest 1% of Americans, exacerbating wealth inequality.

In contrast, the remaining 99% of households have seen their wealth grow by 16.5% from the end of the Biden administration through mid-2026, but the gains have been uneven, with the least-wealthy half experiencing only a modest 10% increase. Despite this wealth accumulation, household spending continues to surge, outpacing pre-pandemic levels, yet inflation-adjusted real spending remains stagnant.

The persistent inflation, particularly in essential goods like gasoline and ground beef, has made life more challenging for the vast majority of Americans, many of whom rely on wages rather than investment income. The widening wealth gap has become a major factor in the political climate, contributing to the declining popularity of President Trump and Republican candidates ahead of the midterm elections.