In 1863, a 74-year-old magazine editor finally convinced Lincoln to establish a national day of Thanksgiving. She'd been asking presidents for seventeen years. Her argument: gratitude could unify a fractured country. With consumer sentiment at near-record lows, her message feels surprisingly relevant.
Markets are questioning whether massive AI infrastructure spending will deliver matching returns, with skepticism growing that revenues can scale from $20 billion to $2 trillion annually by 2030. This doubt compounds broader concerns: economic data shows weakness masked by concentrated AI spending, creating a narrow foundation vulnerable to sharp reversals. The Federal Reserve faces its most difficult decision in years, forced to set monetary policy without two months of jobs and inflation data due to the government shutdown.
The S&P 500 barely moved this week, but beneath the surface, major shifts are underway. The government shutdown ended but left lasting damage to economic data. The Fed's path forward grew murkier. And high-profile investors are raising serious questions about whether AI stock valuations have gotten ahead of reality.
The S&P 500 Shiller CAPE ratio stands at 39.51—the second-highest valuation in 150 years of market history. Only the 1999 dot-com bubble peak exceeded current levels. Historical data shows that CAPE readings above 35 have consistently preceded extended periods of low or negative real returns. With valuations now at 2.3x the long-term average of 17, investors face historically extreme pricing that has occurred only twice before: in 1929 and 1999-2000, both followed by significant market declines.
The S&P 500 dropped 1.63% as investors questioned whether AI stocks had climbed too high, too fast. Meanwhile, consumer sentiment crashed to levels not seen since 2022, and the government shutdown left us flying blind on critical economic data. Here's what the numbers we do have are telling us about where markets—and the economy—go from here.
While equity markets grind higher on AI euphoria, the real economy tells a different story. Harvard economist Jason Furman recently quantified something extraordinary: AI infrastructure investments accounted for 92% of U.S. GDP growth in the first half of 2025, despite representing only 4% of total GDP. Strip out those technology investments, and GDP growth would have been essentially flat at just 0.1% annualized. This isn't normal economic expansion—it's one sector carrying the entire statistical appearance of growth while the broader economy treads water beneath the surface.