“The U.S. economy may look rosy on the surface, but under the hood, it’s supported by just three pillars, writes Bleakley Financial Group’s Peter Boockvar: spending by the rich, spending by the government, and anything to do with artificial intelligence.”
Do you agree?
— unusual_whales (@unusual_whales) April 2, 2025
The U.S. economy might look vibrant at first glance, but its stability is built on a fragile framework that is increasingly unsustainable. Peter Boockvar, of Bleakley Financial Group, highlights three critical pillars keeping the economy afloat: spending by the wealthiest Americans, government expenditure, and the rise of artificial intelligence. These forces may seem to prop up the economy today, but each one has vulnerabilities that threaten long-term stability.
First, let’s address government spending, which has been the backbone of the economy for years, especially under the Biden administration. With federal outlays reaching astronomical levels—as much as $1 to $1.5 trillion in recent spending for various initiatives, including immigration and social programs—the government’s role in supporting GDP cannot be overstated. Without this continuous spending, GDP growth would have flatlined. Yet, as the national debt escalates, there are growing concerns about whether this model is sustainable. When government spending slows, the economy will feel the pain.
Next, consider the wealthiest 10% of Americans, who account for roughly half of all consumer spending and own around 70% of the nation’s assets. Their consumption habits have a disproportionately large effect on the economy. But there’s a looming threat: asset values are declining. Real estate, stocks, and luxury goods are all experiencing setbacks, and if the wealthiest Americans decide to scale back their spending, the ripple effect could be devastating. The economy is essentially riding on the spending of a small group of individuals. If they tighten their belts, it could trigger a much broader downturn.
Then there’s the issue of artificial intelligence. While AI is often hailed as the key to future growth, its true impact remains uncertain. The promise of AI is enormous, yet it is still in its early stages, with the full potential not yet realized. AI could revolutionize entire sectors, but it also comes with significant risks, including job displacement and an exacerbation of inequality. The benefits, though widely anticipated, are not guaranteed, and if AI doesn’t live up to its promise, it could fail to sustain the momentum the economy currently enjoys.
These three pillars—government spending, the wealthy’s consumption habits, and AI—are the primary forces propping up the U.S. economy. However, each is fragile in its own right. Government spending cannot continue indefinitely without causing more harm than good, especially with the national debt spiraling. If the wealthy cut back on their consumption due to declining asset values, the economy will feel a profound contraction. And if AI doesn’t live up to the hype, the expected productivity gains may fall flat.
