Strong U.S. Economy for Some, Struggling One for Others

Originally published on Substack. 

If you read the economic headlines alone, the economy looks fine. Real GDP grew again in the third quarter. Consumer spending held up. Corporate earnings—especially among large firms—remain strong.
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On paper, this doesn’t look like an economy in distress, and the White House has been touting it as the best thing since sliced bread.

​But two recent pieces—one from the Wall Street Journal and another from Bloomberg—tell a more sobering story beneath the surface. Together, they show a labor market that is quietly splitting into two economies: one where large firms thrive, and another where small businesses and many workers struggle to keep up.

That divide isn’t accidental. And it matters.

​What the reporting shows

The Wall Street Journal documents a widening economic gap between large and small companies.

Big firms are gaining market share, enjoying pricing power, and navigating higher costs with relative ease. Smaller businesses, by contrast, face tighter margins, higher financing costs, and greater difficulty hiring and retaining workers.

In labor markets, that means fewer choices for workers and more dependence on large employers.
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Bloomberg reaches a similar conclusion, describing a K-shaped economy in which size increasingly determines outcomes.

Small businesses—historically responsible for most net new job creation—are being squeezed by higher borrowing costs, rising input prices, and weaker demand.

Different outlets. Same conclusion.

The data back it up

Recent labor market data reinforce what this reporting describes.

Job growth has become more concentrated among larger firms, while hiring by small businesses has lagged. Measures of labor market dynamism—such as job switching and voluntary quits—have cooled, particularly outside large employers.

At the same time, the Q3 GDP report showed that growth leaned heavily on consumer spending and government outlays, not a broad-based surge in private business investment. That distinction matters. Consumption can’t support growth, as investment is what builds durable job creation.

When growth depends on fewer firms and more government spending, opportunity narrows even if headline economic numbers look healthy.

Why this keeps happening

The reporting focuses on symptoms. Basic economics explains the cause.

President Trump’s protectionism and uncertainty—especially from tariffs—raised costs and made business planning harder, disproportionately hurting smaller firms that lack scale or diversified supply chains. Tariffs are taxes on inputs, equipment, and consumer goods, and those costs are hardest to absorb at the margin.

Fed Chair Jerome Powell’s monetary policy compounded the problem.

Years of easy money contributed to inflation that eroded real wages and distorted incentives. Subsequent tightening raised borrowing costs sharply, again hitting small businesses harder than large firms that had already locked in cheap financing. Large firms adjusted. Small firms absorbed the shock.

That’s how policy choices—even when well-intended—tilt labor markets toward size rather than competition.

Why GDP growth doesn’t settle the question

One of the most misleading debates today is whether the economy is “good” or “bad” based solely on GDP. Growth can coexist with widening opportunity gaps.

An economy dominated by large firms and government spending can post solid top-line growth using accounting calculations while offering fewer paths upward for workers.

That’s the warning embedded in both the WSJ and Bloomberg pieces. When small businesses struggle, the first rung on the economic ladder weakens.

Over time, that shows up as less job mobility, slower wage growth, and fewer chances to start something new.

Honest takeaway

The labor market isn’t strained because people stopped working or entrepreneurs lost ambition. It’s strained because policy has made competition harder and risk more expensive.

The solution isn’t picking winners, subsidizing scale, or layering on new taxes and rules. It’s restoring the conditions that allow small firms to compete and workers to choose among more options: predictable trade rules, sound money, fiscal discipline, and fewer barriers to entry.

That’s not ideological. It’s practical.

Final thought

The Wall Street Journal and Bloomberg are telling the same story from different angles: a labor market that looks strong in aggregate but fragile underneath.

Growth matters. But how growth happens matters more.

If we want an economy that works for more people—not just the largest players—we need to take this reporting seriously and relearn some basic economics along the way.
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Free-market capitalism is the best way to let people prosper, not big-government progressivism through protectionism, deficit spending, or money printing.