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The US economy has proven more resilient than many feared, but one Wall Street veteran says that a recession is only being held back by tech.
Jim Paulsen, a markets strategist with more than 40 years of experience on Wall Street, argued that most of the economy is already in a recession. Tech spending has an outsized influence on economic growth, bolstering the data while the "old" economy struggles.
"Technology may be the tail wagging the dog, but the rest is a recession by any other name," Paulsen wrote in a Thursday Substack post.
The 'old era economy' is in a recession
Real private GDP rose 2.3% in 2025, Paulsen said, but nearly all of this economic growth is tied to what he calls "new era" growth.
"Excluding new era investment, the other 89% of real private spending rose by only 1% with no job creation," the strategist wrote.
Real GDP is generally considered to be a good measure of economic growth, but in recent years, the metric has seen several distortions from factors like government spending, tax changes, and tariff-fueled supply and demand volatility. Focusing on private real GDP strips out some of these distortions.
"Do we really need to continue focusing mostly on inflation when 89% of the private economy is in a recession and the 11% which is booming — new era pursuits — are by their very nature 'disinflationary'?"
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