The economy has become a starkly divided landscape, where those with the means to invest in emerging technologies like AI are reaping significant rewards, while ordinary Americans struggle to make ends meet. According to Steve Rattner, a former Treasury Department official, the United States is on the cusp of entering what he calls a "K-shaped" economy - one characterized by uneven economic growth, where some individuals and sectors thrive, while others stagnate or decline.
The numbers tell the tale: between 2024 and 2025, the country's GDP slowed to around 2%, a worrying sign for all Americans. However, the pace of AI investment skyrocketed, rising from 12% to 31% of GDP growth during the same period. This means that the wealthy individuals who are driving these investments are capturing a disproportionate share of the economic benefits.
Wage growth is another area where inequality is taking its toll. For decades, wages for low- and middle-income Americans have risen at a slower rate than those for higher earners. However, this trend appears to be reversing, with workers in the bottom quartile now seeing their wages increase by only around 3.5% per year, compared to over 5-5.5% for those above them. This has led to rising income inequality, which Rattner warns is unprecedented in recent years.
The situation is further complicated by the ongoing stock market rally, which has only exacerbated wealth disparities. According to Rattner, this has created a "huge rise in purchasing power on the part of the very wealthy," while ordinary Americans are not seeing significant improvements in their standard of living.
Rattner also notes that the job market is becoming increasingly difficult for average Americans, with a slowdown in employment growth and rising unemployment. This is unusual when considering an economy that's still expanding, and it reflects broader challenges facing workers who don't have access to emerging technologies or high-paying jobs.
As Rattner himself put it, the polls are telling: many Americans believe that the economy is getting worse, not better. For ordinary Americans, life hasn't improved significantly in recent years, despite economic growth. It's a stark reminder of the need for policymakers and business leaders to focus on creating more inclusive economic opportunities, where everyone can benefit from the growth of the economy.
The numbers tell the tale: between 2024 and 2025, the country's GDP slowed to around 2%, a worrying sign for all Americans. However, the pace of AI investment skyrocketed, rising from 12% to 31% of GDP growth during the same period. This means that the wealthy individuals who are driving these investments are capturing a disproportionate share of the economic benefits.
Wage growth is another area where inequality is taking its toll. For decades, wages for low- and middle-income Americans have risen at a slower rate than those for higher earners. However, this trend appears to be reversing, with workers in the bottom quartile now seeing their wages increase by only around 3.5% per year, compared to over 5-5.5% for those above them. This has led to rising income inequality, which Rattner warns is unprecedented in recent years.
The situation is further complicated by the ongoing stock market rally, which has only exacerbated wealth disparities. According to Rattner, this has created a "huge rise in purchasing power on the part of the very wealthy," while ordinary Americans are not seeing significant improvements in their standard of living.
Rattner also notes that the job market is becoming increasingly difficult for average Americans, with a slowdown in employment growth and rising unemployment. This is unusual when considering an economy that's still expanding, and it reflects broader challenges facing workers who don't have access to emerging technologies or high-paying jobs.
As Rattner himself put it, the polls are telling: many Americans believe that the economy is getting worse, not better. For ordinary Americans, life hasn't improved significantly in recent years, despite economic growth. It's a stark reminder of the need for policymakers and business leaders to focus on creating more inclusive economic opportunities, where everyone can benefit from the growth of the economy.