“So, 40% is very elevated, very uncomfortable \u2014 it gives you a sense of how close I think things are to the edge here,” he said.<\/p>\n
LEGENDARY ECONOMIST KNOWN FOR 1969-70 RECESSION PREDICTION WARNS DOWNTURN MAY HIT IN 2026<\/a><\/p>\n Though his comments come on the heels of a better-than-expected April jobs report<\/a> and stocks reaching fresh highs in recent weeks, Zandi pointed out that real disposable income has stalled year over year, showing 0% net growth.<\/p>\n A trader works on the floor of the New York Stock Exchange (NYSE) in New York on May 19, 2026. (Getty Images)<\/p>\n “Real disposable income \u2014 that\u2019s after tax, after accounting for inflation \u2014 is no higher today than it was a year ago. So, there\u2019s been no growth in purchasing power, and that\u2019s going to get worse and start declining,” the economist noted, adding that lower- and middle-class consumers are “living more paycheck to paycheck.”<\/p>\n “You\u2019re gonna have to trade down,” Zandi continued. “You can\u2019t have beef \u2014 you gotta have chicken.”<\/p>\n FOX Business host Larry Kudlow discusses how the economy is performing under President Donald Trump\u00a0 on ‘Kudlow.’<\/p>\n The S&P 500, Nasdaq and Dow have posted a modest pullback since those fresh highs, which Zandi attributed to strength in artificial intelligence-related companies.<\/a> He further explained the divergence between corporate equity gains and the broader U.S. economy.<\/p>\n “The stock market\u2019s not the economy. In my 36 years as a professional economist, the stock market\u2019s never been more disjointed from the economy,” he said.<\/p>\n “What\u2019s driving the stock market train is these big hyperscalers and chip companies,” Zandi added. “Valuations are awfully high\u2026 except for perhaps during the internet bubble, which didn\u2019t end so well.”<\/p>\n![\"Trader](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/05\/nyse-trade-5-19-26.jpg\")
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