MAGA betrayal: Wall Street booms as real economy crashes and tech revolt erupts

Wall Street has never performed so well.
Yet the picture conveyed by American workers is entirely different.
Corporate profits, asset valuations, and productivity have risen significantly over recent decades.
However, most workers feel they reap only a tiny fraction of this growth.
This gap is usually treated as a problem of American domestic politics.
In reality, however, it is an indication of deeper structural problems in the economy.
If the purchasing power of American households continues to decline, economic growth will increasingly become an affair for high-income earners and capital holders, leaving large segments of society behind.
The causes are many.
Standing out, however, is the multi-decade shift in the economic model from labor to capital.
In the second quarter of 2026, labor's share of national income dropped to 52.8%, down from 65.5% in 1947.
This trend accelerated during the 1980s under the dominance of Reaganomics economic policy and has continued up to the present day.

The new social alliance

The major electoral victory of the Democrats over Donald Trump's Republicans on November 3 appears to mark a turning point.
Ten days later, it is becoming increasingly clear that Trump's unconditional alliance with tech giants and Silicon Valley magnates, who present artificial intelligence as an economic utopia, evolved into political suicide: the MAGA movement was formed precisely to reclaim economic policy from the markets and... was betrayed.
This policy proved disconnected from the real concerns of Americans.
Citizens are turning against massive data centers, which drive up electricity and water bills in order to train artificial intelligence models that threaten to wipe out entire professional sectors.
At the same time, the war with Iran further burdens energy and food costs.
Among the leaders of major economies, Trump was the most ardent supporter of artificial intelligence free from substantive regulatory restrictions.
However, the experiment of a new digital Wild West centered on Silicon Valley is not proving particularly popular.
Nor does the working class appear convinced by Elon Musk's proclamations of an upcoming "age of abundance," in which generous universal income programs will prevail.
Very few in the MAGA camp seem to realize that Musk's views often sit closer to... Karl Marx than to Adam Smith.
Rather than adopting the White House argument regarding the "radical socialism" of the Democrats, American voters sent a powerful message against unregulated artificial intelligence, war, high living costs, and the hyper-concentration of economic power in the hands of tech oligarchs.

Skyrocketing inequalities

According to the latest Survey of Consumer Finances by the Federal Reserve, the wealth gap in the US remains immense.
Even though median net worth rose by 2% over the past three years, the richest 10% of Americans hold on average more than 50 times greater wealth than the poorest 20%.
The discontent reflected in the elections was not created overnight.
It had been building for years, yet accelerated during Trump's second presidential term starting in January 2025, just as it had during his first term in office from 2017 to 2021.
Trump's economic policy is largely a repetition of Ronald Reagan's supply-side economics theory, this time featuring a sharp anti-immigration dimension unprecedented in modern American reality.
Reagan's vision, however, has derailed.
Workers, who once received roughly two-thirds of their income from the nonfarm business sector, are today restricted to slightly more than half.

The gap between productivity and wages

Equally revealing is the distance between productivity growth and wage trends.
According to the Economic Policy Institute, a research institute based in Washington, real compensation for typical workers grew by only about 33% over the 1979–2025 period, while net productivity rose by roughly 90.2%.
Low-wage workers lost even more ground in 2025, as the cost of living worsened, wage growth slowed, and tariffs fueled fresh inflationary pressures.
"Our estimates attribute this increase to tariffs," stated economist Mary Amiti of the Federal Reserve Bank of New York.
By February 2026, even before the war with Iran began, tariffs had contributed 2.9 percentage points to goods inflation.
Without them, goods prices would have posted a slight decline.
Francis Genéreux, an economist at Desjardins Group, notes that for many voters the economy has now become synonymous with inflation.
Price increases overshadow employment data, the housing crisis, and even stock market performance.

Promises of reclaiming economic dominance and wealth concentration

The gap between rich and poor in the US has been widening for decades.
In 2025, however, the process accelerated.
"Since Trump took office, the ultra-rich, namely the top 0.1% of the population, increased their wealth per household more than 8,000 times compared to households in the bottom 50% of the wealth distribution," reports Cristina Tello-Trillo, chief economist at the American research organization Center for American Progress.
To illustrate the scale of inequality, she notes that the ten richest Americans increased their net worth by a combined 259 billion dollars over the same period, according to the Bloomberg Billionaires Index.
This amounts to roughly 26 billion dollars per person, a sum 22 million times greater than the 1,200 dollars corresponding on average to the wealth increase of each household in the poorest half of the population.
For three consecutive quarters of 2025, the share of total wealth held by the top 0.1% and top 1% reached its highest levels since 1989, when the Federal Reserve began recording the relevant data.
Since the fourth quarter of 2024, the share of the richest 1% rose from 31% to 31.6%, while the share of the poorest 50% remained stagnant at 2.5%.

According to Tello-Trillo, the widening of this gap is driven, among other factors, by surging stock market valuations and the tax changes pushed through by Republicans via the "Big Beautiful Bill," which primarily favor the affluent.
At the same time, high debt levels continue to weigh heavily on the middle and lower income classes.
Her analysis, based on Federal Reserve data, shows that the net worth of households in the richest 1% rose by an average of 1.8 million dollars, that of the top 0.1% by 9.6 million dollars, while households in the poorest 50% saw their wealth increase by just 1,200 dollars.

The American economy running on an outdated model

The past ten years of Trump's political presence have been marked by an almost obsessive reference to 1985.
His core priorities, namely tariffs, tax cuts, and deregulation, hark back to economic notions from four decades ago.
The same holds true for his desire to weaken the dollar, an objective inspired by the Plaza Accord of 1985, which was signed at the Plaza Hotel in New York, once owned by him.
Through that agreement, the US pressured Japan and European economic powers in order to depreciate the dollar and strengthen the yen. For Trump, this historical development serves as a model of economic negotiation from which the US could once again extract unilateral benefits.
In the 1980s, the target of Trump's anger was Japan.
The New York real estate magnate never missed an opportunity to attack Tokyo, accusing it of systematically draining the American economy and winning the economic competition at the expense of the US.
Even Hollywood joined the climate of confrontation with films like 1986's "Gung Ho," starring Michael Keaton, which depicted the clash between Japanese corporate culture and American auto workers in Detroit.
Today, the target is China.
Trump has accused Beijing of "stealing" from American workers, while discussions of a new Plaza-style agreement, the so-called "Mar-a-Lago Accord," are sparking concern among the Chinese leadership.
Treasury Secretary Scott Bessent is watching the trajectory of the yen with particular attention, as the Japanese currency hovers near levels reminiscent of 1985.
Japan is the largest foreign holder of US Treasuries, with a portfolio of roughly 1.1 trillion dollars.
Bessent knows that a massive sell-off of American bonds by Tokyo could send severe shockwaves through international markets.
When the US Treasury Department launched joint interventions with Tokyo to stabilize the yen in late July, the operation was financed through sales of euros rather than dollars.

The problem with an American president who still thinks in terms of 1985 is that the global economy has already changed fundamentally.
The "Made in China 2025" strategy is reshaping the international economic map, at a time when China is investing in the sectors and technologies it believes will define the world of 2035.
Simultaneously, multinational corporations have spent the past decade reorganizing their supply chains, taking into account not only production costs, but also geopolitical balances, shared values, and national security priorities.

Tariffs are the wrong answer to structural problems

The economic realignment currently underway exposes the weaknesses of American policy. Trump now appears to be shifting from imposing tariffs to promoting American aircraft from Boeing and domestically produced semiconductors.
However, his administration's trade policy remains rooted in a confrontational logic that fails to address the deeper problems of the American economy.
Unfortunately, his predecessor, Joe Biden, largely maintained the tariffs against China imposed during the 2017–2021 period, even though those measures failed to materially alter trade relations between the world's two largest economies.
Biden's attempt to outdo Trump on the trade confrontation front proved counterproductive: it drove up costs for American households, placed greater strain on global supply chains, and provoked retaliation from the Chinese Communist Party.
The message sent was that America is struggling to find fresh, innovative ideas to boost its international competitiveness.
To be sure, Biden attempted to strengthen the productive and technological base of the US.
Unlike Trump, who sought to curb China's economic rise through trade barriers, Biden signed the CHIPS and Science Act in 2022, allocating 300 billion dollars to bolster domestic semiconductor research, development, and manufacturing.
It was a substantive departure from Trump's first term, during which the centerpiece economic measure was a 1.7 trillion dollar tax cut that failed to upgrade the productive capacity and competitiveness of the American economy.
Had that tax policy contributed meaningfully to innovation and productivity, inflation in the US might not have reached 3.7% on an annual basis in September.

The real problem of the American economy

The central lesson from recent developments does not concern who will prevail in the next political showdown in Washington.
The substantive issue runs much deeper: the American economy exhibits an ever-widening divergence between the prosperity of financial markets and the economic reality experienced by the majority of citizens.
Elevated stock valuations, rising corporate profits, and the accumulation of wealth by a small financial elite do not automatically translate into better wages, lower living costs, or greater financial security for households.
On the contrary, stagnant real earnings, high living costs, rising housing expenses, and widening inequalities create an environment in which economic growth is not felt by large segments of society.
Whether the target of American policy is... the Japan of 1985 or the China of today, economic recipes from another era are not going to restore the purchasing power of American households.
What is truly needed is rebuilding the productive base, boosting innovation and productivity, creating better-paying jobs, and ensuring a fairer distribution of the fruits of economic growth.
Wall Street may continue to prosper.
Yet so long as the real economy lags behind, the chasm between stock market indices and the daily lives of Americans will only grow wider.
And this chasm is not merely an economic contradiction.
It has now become one of the most critical political and social problems of the United States, and it is spreading across the entire planet.

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