Tech is Selling Off. Spending Is Outrunning Wages. What Happens When the Wealth Effect Fades?

The current macroeconomic landscape is defined by persistent inflation and a transition from income-driven to dis-savings-driven expansion. Oil prices remain a dominant inflationary force, while the AI sector faces skepticism regarding its ability to generate meaningful macro-level productivity gains despite massive capital investment. Current market expectations for extraordinary earnings growth appear disconnected from real-economy revenue, which remains largely stagnant. Furthermore, the credit system has undergone structural shifts, moving away from high-leverage bank lending toward lower-leverage, non-bank entities, significantly reducing systemic credit risk. While growth momentum remains, the reliance on asset price appreciation to sustain consumer spending creates potential vulnerabilities. The debate centers on whether nominal growth has peaked, with divergent views on the forward-looking attractiveness of bonds versus stocks in an environment where central bank policy remains inconsistent with underlying economic conditions.