The Federal Reserve concluded 2025 by implementing a quarter-point rate cut, marking the third such reduction this year. The decision came as the U.S. economy grapples with a variety of pressures, including tariffs, mass deportations, government spending cuts, and stagnant hiring. While nine board members supported the cut, three opposed it, highlighting a division in economic sentiment amid uncertain price and labor market data following the government shutdown.
Despite these challenges, the U.S. economy expanded at its fastest rate in two years, with a notable growth of 4.3 percent. This paradox paints a complex picture, particularly given that much of this expansion is propelled by spending in the burgeoning artificial intelligence (AI) sector. Economists describe the situation as a “two-track economy,” where one path showcases severe inequality, inflation, and high youth unemployment, while the other reflects a robust tech sector and affluent stockholders driving consumption.
The Brookings Institution’s analysis suggests that the current economic landscape is skewed by the “AI gold rush,” which generates enthusiasm but masks deeper issues in other sectors. According to the Budget Lab at Yale, investments in AI could represent up to 2 percent of the U.S. gross domestic product (GDP) this year, equating to approximately $1,800 per person. Deutsche Bank analysts contend that without tech-related spending, the U.S. might be on the brink of a recession.
However, characterizing the economy as simply two-track oversimplifies the complexities at play. The perceived divide exists within a broader system of uneven capital accumulation, sustained by access to cheap credit. The “growing” segment of the economy relies on extracting rents from the “struggling” portion, intensifying the implications of former President Donald Trump’s push for rate cuts.
Even as technological advancements proliferate, the benefits of AI innovations remain concentrated within a limited framework. Tech giants monopolize essential resources—from data to human interactions—allowing them to extract excess rents while leaving workers in precarious conditions, often facing layoffs and a lack of access to the very systems they contribute to. The AI economy is interdependent, drawing its strength from the exploitation of low-wage labor and unstable job markets.
Skeptics warn of a potential burst of the AI bubble, citing the sector’s extreme concentration and interwoven financing as indicators of its vulnerability. The seven largest tech companies are behind 60 percent of the gains in the S&P 500 this year, engaging in a closed loop of funding and supply. For instance, Oracle, Nvidia, CoreWeave, and SoftBank conduct around $1 trillion in AI transactions among themselves, while Amazon considers a $10 billion investment in OpenAI, which recently secured a $38 billion deal with Amazon Web Services.
Yet, dismissing the financial sector as inherently self-destructive overlooks its adaptability and innovation capabilities, which ensure continued access to credit for these companies. The $29 billion financing package for Meta exemplifies this trend, where asset managers Blue Owl and PIMCO merged equity and debt to fund projects while minimizing debt visibility on Meta’s balance sheet.
As households confront inflation, layoffs, and stagnant wages, they are compelled to take on debt to maintain consumption. This credit-driven ecosystem fosters profitability for a select few while deepening inequality for others. The role of finance is not peripheral; rather, it is integral to the economy’s ongoing functioning, exacerbating the conditions that feed into political and social instability.
In this climate, tech giants increasingly seek state support to fortify their positions. Beyond monetary policy, taxpayer funds are channeled into public-private partnerships, particularly in sectors reliant on AI. While benefiting from favorable regulations, many tech firms enjoy exemptions from tariffs, creating an “AI express lane,” as described in a recent Bloomberg article.
As the intertwining of technology and state deepens, it threatens the groundwork for working-class solidarity and resistance. Understanding the economy as a cohesive system clarifies the durability of its current structure and underscores the implications of monetary policy decisions. The conversation should shift from the allure of a two-track economy to a critical examination of how AI investment actively extracts resources from middle- and low-income households, driving the underdevelopment of the very segments it appears to uplift.
See also
India AI Summit 2026: Transforming Human Capital for an Inclusive Future
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UK Government Orders Elon Musk’s X to Address Grok AI’s Production of Non-Consensual Images
Hyundai, Boston Dynamics, and Google DeepMind Invest $150B to Transform Humanoid Robotics
