"U.S. Economy Shifts from Labor-Driven to Capital-Driven Structure"

According to analysis from the securities industry, the U.S. economy is shifting toward a structure driven more by capital investment than by labor input.

Jung Yongtaek, a researcher at IBK Investment & Securities, stated on the 4th, "The cooling of consumption compared to the U.S. stock market demonstrates a structural change in the U.S. economy."

On the 3rd (local time), a trader is working at the New York Stock Exchange. Photo by AFP Yonhap News

Researcher Jung explained, "While there is ongoing debate over an artificial intelligence (AI) bubble in the U.S. stock market and significant volatility depending on the Federal Reserve's interest rate decisions, the market continues its steady upward trend. In contrast, employment trends have clearly retreated, and the pace of consumption is also showing a gradual decline."

In fact, while the total amount spent during last month's shopping season reached an all-time high, the growth rate slowed. The impact of the Trump administration's tariff policies and rising prices has been greater than the actual increase in purchasing power, which has dampened consumer sentiment. Compared to the sharp rally in the New York stock market since the COVID-19 pandemic, the slowdown in consumer sentiment is even more pronounced.

Researcher Jung further explained, "The U.S. economy has gradually shifted to a structure where capital input contributes more than labor input. Looking at trends in corporate profits and labor input, before COVID-19, both followed a similar trajectory. However, recently, labor input has merely recovered to its previous trend, while corporate profits have surged at a much steeper rate."

As the share of capital increases relative to labor, the share of income distributed to labor has weakened. Jung noted, "Since COVID-19, corporate profit margins have risen sharply, but the growth rate of personal consumption expenditures has been sluggish and has recently shown a clear slowdown. With capital-driven economic growth, labor's share is shrinking and consumer spending capacity is also decreasing."

Additionally, Jung pointed out, "This change does not stop at a mere slowdown in consumption but also leads to increased credit risk. Although the U.S. economy is expected to post similar growth rates this year and next, there is a high possibility that concerns over the economic and financial environment will intensify."

This content was produced with the assistance of AI translation services.