The Great Stagnation: An American Economy of Entrapment

5 minutes read time

While the White House continues to broadcast a message of unprecedented prosperity, assuring the nation that the “best is yet to come,” a profound and debilitating paralysis has gripped the American economy, trapping millions of households in a state of anxious inertia. This is not the vibrant, dynamic engine of opportunity that politicians describe from their podiums. It is an economy of entrapment, a system that has systematically dismantled the pathways to upward mobility and replaced them with a series of golden handcuffs and dead ends. A toxic mix of high borrowing costs, a collapsing job market, and profound political uncertainty has created an economy where the American dream of progress has been replaced by a grim reality of simply treading water, or worse, being pulled under by the current.

The macroeconomic data, stripped of political spin, paints a bleak and undeniable picture of this stagnation. The engine of job growth has sputtered and stalled. Over the past three months, the U.S. economy added a paltry 88,000 jobs, a third of the rate from last summer and a number that barely keeps pace with population growth. The long-term unemployment rate has doubled since early 2023, a clear sign that those who lose a job are not quickly finding another. Underemployment is rampant, with a growing number of Americans forced into part-time work or jobs that fall far short of their skills and qualifications, a silent, unmeasured crisis of wasted human potential. A recent Washington Post-Ipsos poll confirms this reality, finding that nearly twice as many Americans believe it is a bad time to find a job as those who think it is a good time. Confidence in the ability to find a new job is at a record low, a statistical measure of a nation’s fading optimism.

This stagnation is creating a society of entrapment, a landscape of economic cul-de-sacs from which there is no easy exit. Homeowners who were fortunate enough to secure a low mortgage rate during the pandemic are now prisoners in their own homes, shackled by “golden handcuffs.” They cannot afford to sell and move for a better job or a better life, as doing so would mean trading a 3% mortgage for one that is now more than double that rate. This has led to a near-total gridlock in the housing market, with sales plummeting to lows not seen since the Great Recession. The traditional ladder of building wealth through homeownership has had its rungs sawed off.

For the nearly 45 million American households who rent, the situation is even more dire. A staggering 22.6 million of these households are now officially “cost-burdened,” meaning they are forced to spend more than 30% of their income on housing. For these families, the median amount of money left over each month for all other necessities—food, transportation, healthcare, clothing, saving for the future—is a shockingly low $250. This is not a life; it is a permanent state of financial precarity, one unexpected car repair or medical bill away from complete catastrophe. This crisis is forcing a growing number of families into a nomadic life in RVs—not as a lifestyle choice celebrated on Instagram, but as a desperate, last-ditch defense against homelessness, which itself is at the highest number ever recorded. As one woman, forced into an RV with her children after a medical emergency wiped out her savings, put it, “I’m either going to have to be a rich person or a poor person because middle class isn’t possible anymore.”

The job market, the traditional engine of upward mobility, offers no escape. In fact, for many, it has become the primary source of their entrapment. The historical path to higher wages—switching jobs—has been inverted. For the past several months, government data has shown that those who stay in their current jobs have seen higher pay increases than those who switch. This is a perverse and telling statistic, a sign of a labor market so weak that the risk of changing jobs now outweighs the potential reward.

The stories from the ground are a heartbreaking testament to this new reality. A former USAID contractor with a master’s degree and a decade of experience in international development sends out hundreds of applications and cannot even secure an interview. A former chief operating officer for a software company now works in a warehouse, a physically demanding job he took solely to keep his family insured. A recent MBA graduate from a top-tier university described it as the “most difficult year to get a job… in the history of the degree,” a stunning indictment from someone who, by all traditional measures, should be in the highest demand. They describe a broken system where AI-driven hiring tools filter out even the most qualified candidates for phantom jobs, and the few real entry-level roles are swamped with thousands of overqualified, desperate applicants.

This is the reality of the American economy today: a state of paralysis where Americans are enslaved by their low mortgage rates, trapped in jobs with no upward mobility, and unable to afford the basic building blocks of a stable life. It is an economy that, as your notes state, entraps and enslaves its workers, offering the illusion of stability while systematically dismantling any real possibility of progress. The best is not yet to come; for millions of Americans, the best is a fading memory.