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dean baker
Latest GDP Figures Show Rich Reaping Rewards as Working Class Continues to Suffer Under Trump
"People at the top are doing fine, people in the middle and lower income brackets are struggling a bit, to say the least."
Dec 24, 2025
President Donald Trump's allies this week hyped up newly released data showing that the US economy grew by more than 4% in the third quarter of 2025, but economists and journalists who dove into the report's finer details found some troubling signs.
Ron Insana, a finance reporter and a former hedge fund manager, told MS Now's Stephanie Ruhle on Tuesday night that there is a "split economy" in which growth is being driven primarily by spending from the top 20% of income earners, whom he noted accounted for 63% of all spending in the economy.
On the other side, Insana pointed to retail sales data that painted a very different picture for those on the lower end of the income scale.
"When you look at lower income individuals, nearly half of them are using 'buy-now-pay-later' for their holiday shopping," he said. "So we have this real split... People at the top are doing fine, people in the middle and lower income brackets are struggling a bit, to say the least."
Dean Baker, co-founder and senior economist of the Center for Economic and Policy Research, also took note of this split in the US economy, and he cited the latest data showing that real gross domestic income, which more directly measures worker compensation over total economic output, grew at just 2.4% during the third quarter.
Baker also said that most of the gains in gross domestic income showed up at the top of the income ladder, while workers' income growth remained stagnant.
The theme of a split economy also showed up in an analysis from Politico financial services reporter Sam Sutton published on Wednesday, which cited recent data from Bank of America showing that the bank's "top account holders saw take-home pay climb 4% over the last year, while income growth for poorer households grew just 1.4%."
Sutton said that this divergence in fortunes between America's wealthy and everyone else was showing up in polling that shows US voters sour on the state of the economy.
"In survey after survey, a majority of Americans say they’re straining under the pressure of rising living expenses and a softening job market," Sutton said. "The Federal Reserve Bank of Boston says low-income consumers have 'substantially' higher levels of credit card debt than they did before the pandemic. Even as growth and asset prices soar, Trump’s approval ratings are sagging."
Economist Paul Krugman on Tuesday argued in his Substack newsletter that one reason for this large disparity in economic outcomes has to do with the US labor market, which has ground to a halt in recent months, lowering workers' options for employment and thus lowering their ability to push prospective employers for higher wages.
"Trump may claim that we are economically 'the hottest country in the world,' but the truth is that we last had a hot labor market back in 2023-4," Krugman explained. "At this point, by contrast, we have a 'frozen' job market in which workers who aren’t already employed are having a very hard time finding new jobs, a sharp contrast with the Biden years during which workers said it was very easy to find a new job."
None of these caveats about the latest gross domestic product (GDP) data stopped US Commerce Secretary Howard Lutnick from going on Fox News on Tuesday night and falsely claiming that a 4.3% rise in GDP meant that "Americans overall—all of us—are going to earn 4.3% more money."
Lutnick: The US economy grew 4.3%. What that means is that Americans overall—all of us—are going to earn 4.3% more money. pic.twitter.com/SIFi99NRBX
— Acyn (@Acyn) December 24, 2025
In reality, GDP is a sum of a nation's consumer spending, government spending, net exports, and total investments, and is not directly correlated with individuals' personal income.
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‘Yikes’: New Jobs Data Further Undermines Trump Fiction of Thriving Economy
"The booming job market exists only in Donald Trump's demented head," said economist Dean Baker.
Dec 03, 2025
Economists on Wednesday expressed significant concerns after new data from global payroll processing firm ADP estimated that the US economy lost 32,000 jobs last month.
As reported by CNBC, small businesses bore the brunt of the job losses, as firms with fewer than 50 employees shed a total of 120,000 jobs, more than offsetting the 90,000 in job gains reported by firms with 50 or more employees.
The loss of 32,000 jobs in November marked a major miss for economists' consensus estimate of 40,000 jobs added on the month, and CNBC noted that the total number of jobs lost according to ADP data "was the biggest drop since March 2023."
Heather Long, chief economist at Navy Federal Credit Union, noted in a post on X that the job losses recorded by ADP were widespread across the US economy.
"Yikes," she wrote in reaction to the report. "Most industries were doing layoffs. The only ones still are hiring are hospitality and healthcare."
Long also said the disparity between small and large businesses in terms of job growth was more evidence that the US is experiencing a "K-shaped" economy in which those at the top of the economic ladder thrive, even as everyone else struggles.
"Larger companies are still hiring," she explained. "Smaller firms (under 50 workers) are doing the layoffs. It's been a very tough year for small biz due to tariffs and more selective spending from lower and middle-class consumers."
Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, observed that ADP hasn't reported such a big drop in small-business employment since October 2020, when the US economy was suffering through the peak of the Covid-19 pandemic.
Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, cautioned against reading too much into ADP data, although he added that "in the absence of up to date government payrolls, all other signs point to a further deteriorating labor market."
Charlie Bilello, chief market strategist at financial planner Creative Planning, argued that the ADP jobs numbers were part of a negative three-month trend in which the US economy lost an estimated 4,000 jobs per month, which he said was "the first three-month decline since the 2020 recession."
Bilello added that "a year ago, we were adding over 200,000 jobs per month."
Diane Swonk, chief economist at accounting firm KPMG, argued that the ADP report showed job losses in the US economy were "broad based" and "were accompanied by a cooling of wage gains" for workers who still have jobs or are switching from one job to another.
"Those with a job are clinging on, while those without are left wanting," she explained.
Dean Baker, senior economist at the Center for Economic and Policy Research, argued that the ADP report blows up President Donald Trump's spin about the health of the US economy.
"The booming job market exists only in Donald Trump's demented head," he wrote.
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'Not a Pretty Picture,' Expert Says of Trump Economy as Job Growth Grinds to a Halt
"It seems to me like we are looking at a labor market with near-zero labor force growth and near-zero real wage growth," wrote economist Dean Baker. "This means that real labor income in the economy is essentially flat."
Nov 12, 2025
Even without the benefit of recent federal jobs data, which the Trump administration has withheld amid the government shutdown, a prominent US economist argued Wednesday that it's clear the labor market under Donald Trump's leadership is increasingly grim.
Citing private figures that have been used to fill the void left by two consecutive missed jobs reports from the federal government, Dean Baker of the Center for Economic and Policy Research argued that "we can infer" weak job growth in September and suggested Trump or his aides "likely reviewed the September data and made a decision not to release it."
More broadly, Baker wrote, the payroll firm ADP "shows average private sector job growth of just 10,000 a month for the three months from July to October. Since this excludes the government sector, which likely shed jobs over this period due to federal layoffs (even pre-shutdown), the ADP data imply essentially zero job growth over this period."
"The other part of the story is that wage growth also seems to have slowed especially for workers at the bottom end of the wage distribution," Baker added. "It looks to me like we are looking at a labor market with near-zero labor force growth and near-zero real wage growth. This means that real labor income in the economy is essentially flat."
"That is not a pretty picture from the standpoint of the bulk of the population, and it does not describe a very stable path of economic growth," he continued. "When the AI bubble bursts, things might get really ugly really fast."
Baker's assessment came as CNN reported that President Donald Trump considered "traveling the country to give economy-focused speeches" as consumer sentiment craters, tariffs drive up prices, millions face skyrocketing health insurance premiums, and people across the country reel from the administration's assault on safety net programs.
Publicly, Trump has dismissed the notion that people are struggling economically under his administration, calling polling to that effect "fake."
"The economy's the strongest it's ever been," Trump falsely declared during a recent Fox News interview.
On Tuesday, the White House was widely mocked for citing extremely limited data from the food delivery company DoorDash to proclaim that Trump's agenda is "delivering real results for American families."
They’ve laid off so many people that the government is now getting its economic data from DoorDash.
[image or embed]
— Dare Obasanjo (@carnage4life.bsky.social) Nov 11, 2025 at 8:09 PM
Economist Paul Krugman wrote in a blog post on Wednesday that Trump is beginning to face "backlash against his attempts to gaslight the public about the true state of the economy," pointing to "the blowout Democratic victories in last week’s elections" as just part of that backlash.
"Once again, these attempts aren’t about putting a positive spin on the data. They’re just flat-out lies," Krugman wrote. "And Democrats should hammer those lies as proof not just that Trump is utterly dishonest, but that he’s completely out of touch with the reality of American life."
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