AI has changed worker psychology, whether or not it changes employment.

Some interesting data this week: the K-shaped economy might be closing. The wage-growth gap (or the difference in how fast the paychecks of middle-income and lower-income workers) has nearly disappeared, and consumer spending is growing at the same rate across income levels. Fed Chair Warsh says inflation poses less risk than it did a few weeks ago. The labor market is, by most measures, fairly solid.

Maybe I sound like a broken record, but headlines don’t do much to explain the individual experience of the economy. I believe a lot of the increased consumer spending is propped up by short-term debt: People spending not because they’re earning more, but because they’re borrowing more. And just because lower- and middle-income earners are spending more, doesn’t mean most economic activity isn’t propped up by the rich. This may explain why the stock market and the economy are out of sync.

And even if wages are growing, that tells you nothing about how people feel about their long-term financial security. You can get a 4% raise and still feel like the floor underneath you is made of paper. White-collar job postings are still way down, and some people are leaving the workforce entirely and not coming back.

In today’s letter:

• I quit my job. Here’s what that has to do with AI.
• How AI is changing labor (not in the way you think)
• What happens when millions of people have FOBO
• My advice on how to navigate the current job market
• Where to put $1,000 right now
• The case for converting empty offices into housing (finally)
• A pawnshop chain serving both ends of the K-shaped economy
• Why Kalshi is now running ads on Love Island
• Plus: white-collar men and their lawns