U.S. Economy Shows Deep Split as Financial Markets Surge While Real Economy Contracts

The United States is experiencing a widening economic divide, with financial markets booming even as the real economy slips deeper into recession, according to Foresight News.New data shows the U.S. manufacturing PMI has contracted for 18 straight months, signaling persistent weakness in production and demand. Despite this prolonged downturn, the stock market continues to rise, driven largely by profit concentration among major tech firms and financial institutions.Analysts say the divergence stems from liquidity-driven asset inflation, which has lifted equities and bonds but failed to revive wage growth or small business activity. The Federal Reserve’s previous rate cuts boosted market valuations, yet job creation and income growth have remained stagnant, highlighting the limited impact of monetary policy on the real economy.The market structure is shifting toward one dominated by capital flows rather than fundamentals, with inflated valuations in technology stocks and underperformance in defensive sectors. Wealth is becoming increasingly concentrated, with the richest 10% holding the majority of market gains, widening the inequality gap.As traditional markets diverge from economic reality, cryptocurrencies are gaining traction as alternative value-transfer systems independent of banks and governments. Younger generations, in particular, view digital assets as a more accessible path to economic participation.The U.S. economy continues to cycle through policy-driven expansions and contractions, and analysts expect a new round of monetary easing as early as 2026 if real economic conditions fail to recover.