U.S. Economy in Recession, With Only Tech Propping Up GDP

Most of the US economy is in a recession, veteran strategist Jim Paulsen said in a recent post, Naomi Buchanan reported for Business Insider.

The GDP metric has seen distortions in recent years stemming from factors such as government spending, tax changes, and tariff-driven supply and demand volatility.

Paulsen, who has more than 40 years of experience on Wall Street, argued that technology spending is propping up the broader economy. He compared the bifurcation to the performance of the “Magnificent Seven” tech stocks versus the rest of the stock market.

“The technology sector may be the tail wagging the dog, but the rest is a recession by any other name,” Paulsen wrote in a Substack post.

Real private GDP rose 2.3% in 2025, Paulsen said, but nearly all of that economic growth is tied to what he calls “new era” growth.

“Excluding new-era investment, the other 89% of real private spending rose by only 1%, with no job creation,” the strategist wrote.

Real GDP is generally considered a key measure of economic growth, but in recent years the metric has seen distortions from factors such as government spending, tax changes, and tariff-driven supply and demand volatility.

Focusing on private real GDP strips out some of these distortions.

“Do we really need to continue focusing mostly on inflation when 89% of the private economy is in a recession and the 11% that is booming — new-era pursuits — are by their very nature disinflationary?” Paulsen wrote.