The Economy Is Booming. Why Doesn’t It Feel Like It?

The current state of the U.S. economy is showing signs of growth and prosperity, with low unemployment rates and record highs in the stock market. However, despite these positive indicators, many Americans are feeling a sense of financial insecurity and unease.

Recent consumer sentiment readings from reputable sources like the University of Michigan and The Conference Board have shown an improvement in June. This is partly attributed to the decrease in gas and oil prices following the escalation of tensions in Iran. Despite these improvements, a prevailing sense of pessimism remains among the general population.

A recent report from the New York Federal Reserve Bank sheds light on the disconnect between economic data and the lived experiences of everyday Americans. The report reveals that U.S. workers are not reaping the benefits of economic growth as they once did. In fact, the “labor share,” which represents the portion of national income allocated to workers through wages and salaries, has reached an all-time low of 53.7% in the first quarter of 2026.

This decline in the labor share is a stark contrast to post-World War II levels when workers received over 65% of the national income. The trend of diminishing labor share has been ongoing since the early 2000s, with significant drops following economic downturns like the dot-com bust, the Great Recession, and the COVID-19 pandemic.

According to experts cited in the report, the shrinking labor share means that other sectors, such as corporations and investors, are reaping the benefits in the form of increased profits and dividends. Data from the U.S. Commerce Department shows that corporate profits as a share of income have reached 12.2%, the highest level since 1929.

Various factors contribute to this disparity, including the prioritization of artificial intelligence over human labor, rising CEO compensation, price hikes by big corporations, and a decrease in the labor force due to reduced immigration rates. These trends point to a widening gap between the wealthy elite and the average worker, with workers seeing their share of the economic pie diminish while billionaires continue to amass wealth.

The implications of these economic shifts are concerning, as they indicate a systemic problem that disproportionately benefits the wealthy at the expense of the working class. As policymakers and economists grapple with these challenges, it is essential to address the root causes of income inequality and ensure that economic growth is inclusive and beneficial for all segments of society.