The Stock Market Just Got a Sobering Reality Check: Conor Sen

A booming stock market just got a sobering reality check from the real economy.

Optimism around artificial intelligence and the passage of the deficit-expanding tax bill have made some investors wonder about the risk of overheating, with the S&P 500 reaching a fresh record in July. Last week’s reports on jobs and economic growth made clear that those concerns are purely a financial markets phenomenon, one that’s disconnected from activity on the ground.

Sure, we’ve seen an explosion in AI capital spending in recent years. But this increasingly looks like the only game in town for growth. Housing, consumption and government spending — nearly 90% of the economy ...