Bubbles and lies: Trump’s tariff economy and the AI hype machine

Wall Street just threw another parade. The so-called “Magnificent Seven” tech giants — Meta, Microsoft, Amazon, Apple, Google, Nvidia, Tesla — reported quarterly earnings. Headlines screamed that the economy is “booming,” and President Trump jumped in with his usual bravado: “America is the hottest country anywhere in the world.” Stock indexes hit records, and the pundits swooned.

But stop and read past the ticker tape. The reality on the ground is pretty ugly. Tech profits did climb, yes — but not because artificial intelligence is unleashing a new industrial revolution. The gains are coming from old, established business lines: advertising, cloud services, subscription platforms. 

Meanwhile, hundreds of billions are being poured into AI hype — data centers, chips, research — not because AI is generating new wealth or employment, but because surplus capital cannot be profitably deployed in productive investment elsewhere. This is monopoly-finance capitalism: inflating assets and manipulating markets, turning money into more money, disconnected from real production or social need.

Outside the gleaming towers of tech, the U.S. economy is sputtering. Strip away Trump’s tariffs — which artificially boost GDP by forcing working people to buy domestic goods instead of cheaper imports — and growth falls to a pitiful 1.2%. Business investment is flagging, employment is frozen, and manufacturing jobs are disappearing faster than during the pandemic slump. Inflation clings stubbornly above 3%, keeping real wages locked where they were five years ago. For working people, the “record economy” is a joke.

Tariffs: A 1920s strategy in 2025

Import tariffs now average 18.2% — their highest level in nearly a century. Trump brags that they are “bringing in billions,” but in the context of a trillion-dollar military spending deficit, these billions are trivial. Meanwhile, tariffs push prices up and distort trade flows.

Yale economists estimate Trump’s tariffs will add 2% to consumer prices, roughly $2,400 per household annually. In other words, Trump is driving inflation onto working people while pretending to champion national self-reliance. The economic strategy is medieval, the impact is modern-day brutality.

Jobs data as political theater

If the economy is faltering, why do media headlines still trumpet growth and resilience? The answer is simple: The numbers are manipulated. On Aug. 1, the Labor Department quietly admitted that 258,000 fewer jobs were created over the past year than initially reported. That’s not a minor correction — it completely undermines the narrative of a robust labor market.

Overestimating employment during downturns is not a mistake; it is a capitalist tactic. Statistical agencies assume expansion continues at the same pace, even as businesses fail. As Marxists have long argued, this serves a purpose: Painting a rosier picture of the economy helps prevent investors from panicking in the stock, bond, and real estate markets, and delays pressure on central banks to cut interest rates.

Protecting the sham, Trump fired Erika McEntarfer, head of the Bureau of Labor Statistics, accusing her of releasing “fake data,” the revision that showed a significant fall in jobs. In her place, he put E.J. Antoni, a Heritage Foundation hardliner and Project 2025 co-author, tasked with “fixing” the numbers — by redefining unemployment to make it look smaller, or even shutting down the monthly jobs report altogether. In short, the government office that tracks employment is being turned over to political loyalists whose job is to manipulate the numbers in favor of corporations and against workers.

The class logic of ‘full employment’

Capitalism does not thrive on full employment. It thrives on a “reserve army” of unemployed workers to keep wages low and discourage labor militancy. Celebrating “robust employment” is not a victory for workers — it’s propaganda to hide underemployment.

When most workers can’t walk away from low-paying jobs, corporate profits are safe. Interest rate hikes by the Fed that cause unemployment and economic hardship are praised as “stability.” And capitalist economists promote the idea that unemployment is necessary to stop wages and prices from rising too fast. 

Unemployment is accepted because it protects profits.

The AI bubble and speculative capital

At the same time, U.S. capital is gorging itself on a new speculative bubble: artificial intelligence. Billions in private credit are financing massive AI projects. Wall Street celebrates the hype while real economic activity stagnates. GDP rises, but real purchasing power does not. Workers’ wages remain frozen, their job security eroding, while the ultra-rich sit atop speculative gains.

The AI boom is a classic capitalist mirage: It creates the appearance of innovation and progress while concentrating wealth and masking stagnation. When the bubble bursts — as these bubbles eventually do — the working class will be left holding the bag.

Capitalism’s double bind

U.S. capitalism faces a brutal contradiction. On one side, speculative capital thrives on the AI bubble, feeding itself through private credit and hype. On the other hand, the real economy flirts with stagnation, inflation, and layoffs. Tariff nationalism accelerates the squeeze, raising costs.

Trump, ever the carnival barker, insists that the country has never been richer even as workers’ wages are depressed, living standards stall, and more people face economic insecurity. His firing of statistical officials shows the blunt edge of authoritarian capitalism: When reality threatens profits, reality itself is rewritten.

But the problem is not just Trump. It is the logic of a system that requires recurring crises to discipline labor, manage overproduction, and restore profitability. AI hype, tariffs, and fake jobs numbers create the illusion of a booming economy — but it’s really just a cover for big profits gained by squeezing workers.

The human cost

For the working class, the contradictions are not abstract — they are immediate and brutal. Inflation quietly erodes paychecks. Jobs disappear in factories and warehouses. Prices for essentials rise under tariffs while AI hype fuels stock market gains for a handful of billionaires. The spectacle of economic growth is just that: a show. The reality is falling wages, mounting insecurity, and repression.

When the AI bubble bursts, when tariffs finally push the economy into stagflation, the bill will fall not on Trump or Wall Street, but on the working class. Profits at the top will be defended; sacrifices at the bottom will be demanded. History shows this is not a glitch but a feature of capitalist logic. Crises are the mechanism by which capital enforces its own survival.

Looking ahead

The illusions of prosperity cannot last forever. The gap between soaring profits and stagnant living standards grows wider every day. Trump’s authoritarian measures, AI hype, and tariff nationalism are temporary props for a fragile system. Eventually, the contradictions will surface: Speculative bubbles will collapse, inflation will bite, and unemployment will rise.

Workers will be the ones paying the price. And yet, this same system that penalizes labor could be challenged — if working people organize, fight for gains, and resist the repression imposed by recurring crises. The future is not set in stone; it is shaped by class struggle.