The Newly Emerging “E” Economy and What it Means for Your Income Level
The last time the American economy genuinely created additional wealth for the average American was post-World War 2. The GI bill helped active-duty service members, veterans, and their loved ones cover the cost of secondary education. Workers received higher wages under the protections of unions and a large manufacturing boom that grew to 30% of the workforce.
That window of time only lasted about 30 years.
Ever since, there has been a slow dismantling of that infrastructure while telling people the problem is their spending habits, or that they need additional income with a gig or selling plasma.
A couple of matcha teas aren’t why you can't afford a house either. The system stopped building the ladder and gurus started selling you pipe dreams about climbing the economic ladder.
The Post Pandemic K Shaped Economy Scare
Post pandemic, I’ve heard about the rise of the “K-shaped economy”. I was intrigued about the so called impending recession that experts were warning us of. Let’s take a closer look to understand the cause and effect because this current economy does not use traditional stock market fundamentals.
In 2025, there were only 7 companies that accounted for the S&P 500’s total return. Naturally, the S&P 500 stock index should represent a total of 500 companies across 11 industries, but now stakeholders and investors should just pray for Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla every night before bed.
In May 2023, Bank of America analyst Michael Hartnett coined the term "Magnificent Seven" because those 7 companies own the infrastructure everything else runs on.
Amazon owns the internet. Not literally but effectively. A huge percentage of websites, apps and services run on Amazon Web Services. If AWS goes down half the internet goes down with it.
Microsoft owns the workplace. Office, Teams, Azure cloud, LinkedIn, and now Copilot baked into everything. Every corporate job in America touches Microsoft before lunch.
Google owns information. 90% of searches go through Google. They also own the ad infrastructure that funds most of the internet. And YouTube. And Android.
Apple owns the device. iPhone controls about 57% of the US smartphone market. Every app, every purchase, every tap goes through their ecosystem. They take a cut of all of it.
Meta owns attention. Facebook, Instagram, WhatsApp. Three of the most used apps on earth. They don't sell products. They sell your eyeballs to advertisers.
Nvidia owns the engine. Every AI model being built right now runs on Nvidia chips. OpenAI, Google, Microsoft, Amazon, Anthropic all must buy from Nvidia. It's the one company that profits regardless of which AI horse wins.
Tesla is the outlier honestly. It's there mostly because Elon Musk commands a following that moves markets.
The Lack of Fundamentals Is Playing With Your Head
We feel poor but the economy is better than ever. Everyone has been ringing the recession alarm bells for a few years now, but this time the recession only applies to you. Someone even said, "If you aren't wealthy, you've been living in a recession for four years now."
The axioms that were supposed to govern how markets work are functionally broken:
The stock market should reflect the state of the economy.
Instead, it reflects the economy of asset owners. Workers are constantly losing purchasing power. Now the decoupling of the market and the economy allows financial markets to grow disconnected from productive economic activity. The economy stops being about making things and the rich are more optimistic than ever in an economy that is filled with a bunch of maybes
Diversification should shield you from risk.
The Magnificent 7 makes up a third of the S&P 500. Most people’s 401K is invested into the S&P 500. You're not diversified. You just think you are. In the Great AI Race, someone is going to get crushed. Remember some of the largest brands died when the economy made unpredictable moves like now.
The price of a stock should reflect the companies earnings.
Nvidia trading at a price to earnings (P/E) ratio that’s unheard of. A decade ago, what a company made mattered. Now, we trade based on public relations narratives and mutual agreements in subreddits.
We’ve already made our beds.
Usually someone could read the charts and tell you when its time to sell off shares. But not when index funds are on autopilot. Every paycheck that flows into a 401k buys more Nvidia whether it's fairly priced or not, drowning out the price signals that are used to trigger stock market corrections. And the institutional players loaded up on Mag 7 already too exposed to sell their way out, balancing the stock would do more harm than good now.
The recession kept not coming not because the fundamentals were fine.
It's because fundamentals stopped correlating to the market.
The 7 Eras of the American Split
The story of the modern American economy isn't that we stopped getting wealthier.
It's that politicians continuously rewrote the rulebook on who gets to keep their wealth. What started as a shared lift in 1947 has fractured into three entirely different experiences of American life.
Over seven distinct eras, policy decisions consistently redirected wealth to another group of people:
unions got gutted,
manufacturing left,
stock buybacks replaced wages,
Wall Street got bailed out while Main Street didn't,
and cheap money inflated assets only people who already had assets could benefit from.
The result is an E-shaped economy where three tiers of Americans are having three completely different experiences of the same country.
This wasn't accidental and it wasn't inevitable.
Every era had a trigger and every trigger had an author. Understanding that is the difference between blaming yourself for not keeping up and realizing that the finish line was moved every time the little
You didn't open Pandora's box. Its results were simply inherited, but the system was built assuming you'd continue to feed it on autopilot. That's one assumption you can actually control.
How You Can Fight it Without Running for Office
The system was built assuming you wouldn't notice. That you'd keep upgrading, keep subscribing, keep feeding the machine on autopilot.
The most radical thing you can do right now isn't protest. It's to vote with your money. OVER and OVER again until they notice.
Your phone and devices
The average American upgrades their iPhone every 2.5 years. Apple's entire business model depends on you deciding you need a new phone. A phone that works perfectly fine gets replaced because a new camera feature got announced and the old one got a software update that conveniently slowed it down.
Let’s admit it. The last 3 phones were the fucking same. Only upgrade if Apple really brings their A game. Don’t fall for the enshittification of hardware and software.
Your streaming and subscriptions
Audit every subscription. Cancel the ones you're not using. Share accounts where the terms allow it. Rotate services instead of stacking them. Watch one, cancel, subscribe to the next. They designed the friction of cancellation deliberately. Pushing through it is the move.
Your search and browsing habits
Google makes money every time you search. Every click on a sponsored result is a micro payment to the most profitable advertising machine ever built. DuckDuckGo doesn't track you and doesn't feed the machine. Firefox instead of Chrome. At first sight, this looks like a worthless move, however, if a lot of people did it and were persistent, it will erode the data monopoly that funds the whole operation.
Your money itself
This is the biggest one and the most overlooked.
The average American has their checking and savings at one of four banks — JPMorgan Chase, Bank of America, Wells Fargo, Citibank. These banks take your deposits and use them to fund leveraged investments, corporate loans, and Wall Street activity that has nothing to do with your neighborhood.
A local credit union takes your deposits and loans them to people in your community. Small businesses. First time homebuyers. Local car purchases. The money circulates locally instead of evaporating into a balance sheet in Manhattan.
Moving your checking account is the single most impactful quiet exit available to a regular person. It is also the one almost nobody does because the friction feels enormous and the benefit feels invisible.
Your shopping
Amazon's dominance isn't just about price. It's about the fact that they made convenience so frictionless that comparison shopping feels like work. That frictionlessness is a deliberate design choice funded by years of operating at a loss for almost a whole decade to train you out of the habit of buying anywhere else.
We’re like a domesticated herd of animals at this point! (I sit uneasy as I write this). But they made us addicted to food, drugs, instant gratification, and sex. We sit back and slam the easy button every single chance we get without realizing the repercussions.
The counter move is deliberately reintroducing friction into your own shopping. Wait 24 hours before buying anything on Amazon. In that window check if a local store carries it. Check if a small business sells it online. Check Facebook Marketplace or a local buy nothing group.
You won't always find it. But sometimes you will. And every time you do that's a dollar that stays closer to home. Even a quickspin around eBay can help a small business owner.
Your investing
If your 401k is in a default S&P 500 index fund you are already maximally exposed to the Magnificent Seven. You can't fully exit that without leaving the tax advantaged account which isn't worth it.
But you can rebalance. Ask your 401k administrator about small cap funds, international funds, dividend focused funds, or ESG funds that deliberately underweight the mega caps. Spread the exposure.
Outside your 401k open a Roth IRA and put it in something that doesn't mirror the S&P 500 concentration. Local investment platforms that fund small businesses in your area. When diversifying ensure your ETFs are more diversified.
Your community
Go find five local businesses that you genuinely like and make them your defaults — the coffee shop, the hardware store, the restaurant, the used bookstore, the neighborhood grocery. Stop treating them as the backup option when Amazon is out of stock and make them the first call instead.
Refer people to them, leave reviews, and show up consistently. Building a more circular economy starts with your shopping habits and no one else's.
The honest caveat
None of this is cheaper or easier. Local goods cost more. The credit union app is slower. DuckDuckGo misses things Google wouldn't. Canceling subscriptions takes longer than it should because they designed it that way deliberately. These are real tradeoffs and pretending otherwise would be dishonest.
But the convenience premium you've been paying to the Magnificent Seven has a back end that never shows up on the receipt. It shows up in your rent, your mortgage rate, your job market, and your grocery bill. The friction of opting out is real, but so is the cost of staying in.
How Soon Will It Get Better?
Naturally this mess took decades to get into so it may take decades to get out. But here is what I would predict what would happen if many of us decided to follow through. Here is how these changes would affect your day to day life and the economy.
Immediate Effects
Personal: Canceling unused subscriptions instantly stops financial bleed, saving the average American $200+ a month or $2,400 a year. Keeping a smartphone one extra year saves $800 to $1,200. Switching to a credit union offers better loan and refinancing rates immediately.
Community: Nothing yet. This is still just you.
6 to 18 Months
Personal: Intentional spending habits free up $200 to $400 a month. Combined with subscription audits, holding devices longer, and banking locally, you're looking at $3,000 to $6,000 a year staying in your pocket instead of leaving it.
Community: The coffee shop you started going to every morning hired someone. The bookstore expanded their hours. Small signals, but real ones.
2 to 5 Years
Personal: Your savings rate is meaningfully better. The 24-hour rule killed impulse spending. You're not rich but you're harder to knock over.
Community: Local businesses keep $68 of every $100 spent in the local economy versus $43 for national chains and effectively zero for Amazon. If a neighborhood shifts just 20% of spending locally the tax base grows and property values stabilize. Cities that sustained buy-local campaigns past the initial enthusiasm saw measurable economic shifts within three to five years.
10 Years Out — The System Starts to Feel It
This is where individual behavior becomes collective pressure.
Maybe an iPhone will be released every 2 years as a part of Apple's product roadmap.
A decade of credit union growth shrinks the deposit base the big four banks use to fund Wall Street activity.
A decade of local spending builds enough small business density that national chains start losing thei mass appeal.
None of this is guaranteed. This concentration of wealth has built slowly and quietly over decades. Dilution will work the same way — slow, unglamorous, and it will feel unrewarding because it may take decades to shift the tide.
The honest take is this: Nvidia isn't going down next quarter. But ten years of people quietly opting out compounds in a powerful way.
And $3,000 to $6,000 a year not leaving your account becomes a down payment, debt payoff, or an emergency fund large enough that the next layoff wave lands as an inconvenience instead of a catastrophe. Your credit union is offering you a mortgage rate the big banks won't touch. Your 401k didn't crater when the Magnificent Seven corrected because you didn't have everything riding on seven stocks. And your neighborhood bookstore is still open.
That's the ten year return. Not revolution. Just resilience.
Sources:
Bank of America / Michael Hartnett — "Magnificent Seven" coinage, May 2023 (via Fortune, Kiplinger, U.S. News)
Counterpoint Research / BankMyCell — Apple U.S. smartphone market share (~57%)
StatCounter / Statista — Google global search engine market share (~90%)
Civic Economics — Andersonville Study of Retail Economics: $68 local vs. $43 chain per $100 spent (via Institute for Local Self-Reliance)
National Retail Federation — Valentine's Day, Mother's Day, Father's Day annual spending surveys (2025–2026)
Bureau of Labor Statistics — Cumulative inflation data
