Biden Boom Vs. Trump Freeze: Paul Krugman Says We Traded Pro-Worker Recovery For K-Shaped Recession - SPDR S&P 500 (ARCA:SPY)

Economic Inequality and Labor Market Trends - Paul Krugman warns that the U.S. has shifted from an inclusive recovery during the Biden years to a stratified "Trump freeze," resulting in a K-shaped economy where the wealthy prosper while the working class lags behind [1] - Krugman highlights that during the Biden presidency, wage growth for the bottom 25% of earners outpaced that of the top 25%, a phenomenon he refers to as "Great Compression," driven by a tight labor market [2] - Since late 2024, this trend has reversed, with high-income earners benefiting while wage growth for low-income workers has stagnated, barely keeping pace with inflation [3] Labor Market Conditions - The current "frozen" job market is identified as a key issue, contrasting with the hiring environment of 2023, where employers are hesitant to hire due to uncertainty stemming from Trump's tariff policies [4] - Overall unemployment has risen to 4.6%, with Black unemployment significantly increasing since summer 2025, indicating that marginalized groups are disproportionately affected by the current economic conditions [5] Market Performance - On Christmas Eve, the S&P 500 and Dow Jones indices reached record closes, with the S&P 500 up 18.12%, the Nasdaq Composite gaining 22.47%, and the Dow Jones increasing by 14.95% year-to-date [6] - The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ) also closed higher, with SPY up 0.35% and QQQ up 0.29% [7]