{"text":[[{"start":6.5,"text":"The writer is founder and chief executive of Longview Economics"}],[{"start":10.35,"text":"The puzzle in the US economy is not simply that growth has slowed in the past two quarters — it is that the main indicators of its health no longer sit comfortably together. "}],[{"start":20.6,"text":"Consumer spending has held up, corporate profits are near record highs and equities still command rich valuations. Yet real disposable income growth has cooled and job creation has been unusually weak for an economy that is supposedly still expanding solidly. "}],[{"start":38.6,"text":"Those are not impossible combinations. But they are unusual enough to suggest that the apparent strength of the cycle is less broad than the headline numbers imply."}],[{"start":48.2,"text":"The cleanest explanation is concentration. The gains in profits, margins, capital spending and market value have been clustered in a narrow AI ecosystem: chipmakers, hyperscalers, data centre operators and the infrastructure groups around them. Outside that circle, the picture is much less compelling. "}],[{"start":68.15,"text":"Large parts of corporate America have managed only modest profit growth, margin pressure or flat performance. The market performance, however, is dominated by the exceptional minority rather than the mediocre majority. That has made the economy look stronger, and the equity market broader, than either really is."}],[{"start":null,"text":"
"}],[{"start":86,"text":"That matters because the market is pricing aggregate margins as if they were broad, repeatable and durable. They are not. The US corporate profit share has climbed to a record 13.8 per cent of GDP, while net income margins across the broad US equity market have recovered to about 9.7 per cent, close to earlier highs. At the same time, market leadership has become unusually concentrated: a handful of AI‑linked stocks now account for roughly 40 per cent of the S&P 500’s market capitalisation, according to Bank of America data."}],[{"start":119.95,"text":"Headline profitability is being flattered by a small slice of the economy earning extraordinary returns from the scramble to build AI capacity. Investors may therefore be paying premium multiples for earnings that are less representative of the wider corporate sector than the index level implies. In other words, valuation risk does not just lie in expensive technology stocks. It lies in the possibility that the earnings backdrop for the whole market is less robust than aggregate data suggests."}],[{"start":147.8,"text":"The labour market tells the same story in reverse. In a normal expansion, strong profits feed stronger hiring as companies add capacity. This time, many of the biggest profit winners are also the least labour intensive. "}],[{"start":null,"text":""}],[{"start":161.4,"text":"Payroll growth in April was just 0.43 per cent from a year earlier, well below the roughly 1 to 1.5 per cent annual pace that has typically accompanied a growing US economy. Large technology groups have produced surging revenues and margins with only limited growth in headcount. If the sectors capturing the gains are not generating many jobs, aggregate income growth weakens and the expansion becomes more brittle. "}],[{"start":188.20000000000002,"text":"It also explains why consumption has looked firmer than income data would suggest. Spending strength is increasingly coming from upper-income households where wealth and income are more tied to equities than wages. The stock market has, in effect, become part of the growth model: rising AI profits lift share prices; higher share prices support the spending power of wealthier households; and that spending helps keep demand alive. Lower-income households, by contrast, are more exposed to squeezed real incomes and softer labour-market momentum. "}],[{"start":221.40000000000003,"text":"For now, that narrowness need not end the expansion. So long as investors believe AI will earn very high long-term returns, the loop can remain self-sustaining: capital expenditure stays firm, equities stay buoyant and affluent consumers keep spending. There is also a reflexivity to the story. The more capital that flows into the theme, the more convincing the headline numbers appear to become. But the same structure that has made the US look resilient also makes it unusually dependent on confidence. When growth lacks breadth, belief does more of the work."}],[{"start":256.75000000000006,"text":"The risk, then, is that the economy, the profit cycle and the market narrative are all leaning on the same narrow pillar. If the expected returns on AI infrastructure and platforms are questioned, the fallout may not stop at a few richly valued technology stocks. "}],[{"start":272.95000000000005,"text":"It could run through weaker wealth effects, softer consumption and, ultimately, a broader reappraisal of US exceptionalism. None of that means the story must break tomorrow. America still looks strong. But the foundations of that strength are narrower than many investors care to admit."}],[{"start":296.65000000000003,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780647420_7258.mp3"}