The fate of the Trump administration — and perhaps Republicans in Congress as well — is tied to American sentiment about the economy.

And right now, nobody knows what the hell is going on or which way is up.

According to The Wall Street Journal on Thursday night:

Stocks surrendered gains and closed sharply lower after a whirlwind day of trading that began after Nvidia posted strong results. The Nasdaq composite led indexes lower after being up on the day more than 2%. It closed 2.2% lower. Nvidia gave up an even bigger gain and finished the day down 3.2%.

Why did they end up down?

Because investors suspect there is, in fact, an AI bubble.

That suspicion is not unrealistic. Whenever there’s a transformative technology, people seem to think that just because there is a bubble, that means that the underlying technology is not transformative. If you look back at the history of investment, however, there is always a speculative bubble around brand-new technologies, and it tends to clean out failing companies.

You remember the successful companies. So you remember Henry Ford because Ford ended up being a wildly successful company. But there were dozens of other automobile companies that were startups at the time that ended up crapping out. In fact, Ford had several of them before he actually started the Ford Motor Company.

The same thing was true of the internet.

Everyone remembers that when the Internet bubble burst in 2000, Pets.com was seen as emblematic of the era. 

But what we should remember is that the internet has completely transformed everybody’s life. We all work on the internet. We all do commerce on the internet; we all interact on the internet.

The stock market bubble of 2000 did not mean the internet wasn’t important. There are idiots like Paul Krugman who tried to suggest that it wasn’t important. It was very important.

That’s also true with regard to AI. People are looking at the current AI boom, and they’re thinking that at some point here it has to crap out, that some of these companies are not going to be able to develop the kind of margins or gross income that justifies the investment they are currently making. OpenAI is the most obvious example of a company that is not publicly traded, but has so many contracts with publicly traded companies ranging from Oracle to Nvidia that if it craps out, it could take down a bunch of companies with it, or at least severely damage their market capitalization.

According to The New York Times:

It would not be a stretch to describe this period of hyperactive growth in the tech industry as a historic moment. Nvidia, which makes computer chips that are essential to building artificial intelligence, said on Wednesday that its quarterly profit had jumped to nearly $32 billion, up 65 percent from a year earlier and 245 percent from the year before that. Just three weeks ago, Nvidia became the first publicly traded company to be worth $5 trillion. 

That means Nvidia is now worth more, according to the stock market, than the entire economy of Germany. 

But some industry insiders say there is something ominous lurking behind all this bubble news. They look at the same eye-popping growth and the same stunning wealth creation from Mr. Huang and see a house of cards. And they say it is hard to know what the damage will be if it collapses.

Even Nvidia’s growth can be explained away because demand for the company’s chips doesn’t mean that people want to use AI; it means that companies are building giant AI systems in the hope that somebody will pay to use them eventually.

This is going to be the question: At some point, the productivity generation from AI is going to have to start matching up to the investments that are being made. People are betting on whether there’s going to be an AI boom that justifies all this or an AI bust. 

We don’t know which way it’s going, which is why people are freaking out.

They’re also freaking out because if it does succeed, there will be some temporary jobs dislocation. There are a lot of jobs that will become obsolete.

The history of job creation is that the economy becomes more productive. You get nicer things for cheaper prices. You work fewer hours; your grandparents worked many more hours than you do, for example.

But it also means that there is — with technological change —  significant job dislocation, people losing the kind of jobs they’ve historically held, and then having to find new jobs.

We’ve generated millions and millions of jobs in areas that we didn’t even know existed. This is just the way the economy tends to work.

That doesn’t mean that the angst and heartburn about job dislocation are false.

Thus, two things can be true at once: We can be in a transformative, amazing time for the economy, and the uncertainty and the concern can be real.

And it can’t all be alleviated by the government.

Republicans in California have had a notoriously uphill battle when it comes to getting elected in recent years. However, the Democratic field in the 2026 gubernatorial race continues to grow larger, and it could spell trouble for the party with the state’s unusual “top two” primary system.

Rep. Eric Swalwell (D-CA) entered the race this week, with fellow Democrats including former Rep. Katie Porter, former Health and Human Services Secretary Xavier Becerra, and State Superintendent Tony Thurmond being among the long list of people in the race, with former Fox News host Steve Hilton and Riverside County Sheriff Chad Bianco being the two major Republican names in the race.

If the field does not thin out before the June 2 primary election, it could result in an uncomfortably close primary victory margin for the Democrat who makes it to the top two – or an even seemingly unlikely scenario of both Hilton and Bianco advancing to the general.

Primary polling has shown both of the Republicans alternating between first and third place spots, depending upon the poll, with Porter usually in coming in second. The field is so large that the margins between the candidates are fairly narrow.

The former congresswoman’s campaign has been marred by controversy following a botched viral interview with CBS News and a Politico report of a video of her telling a staffer to “Get out of my f***ing shot!”

It’s unclear if the Democrats will consolidate, given that many of the Democrats in the race took a shot at Porter amid the controversy, and she also took aim at billionaire climate change activist Tom Steyer’s entrance into the race earlier this week.

“I don’t think it’s impacted my race. I think all along we truly have believed that we are going to be number one in this race anyway. And so really, it’s going down to number two. Honestly, what we’re seeing is complete disarray in the Democrat Party,” Bianco told The Daily Wire.

He further added that “yes, it’s very possible with the right campaign that two Republicans end at the top,” saying that he’s heard from moderate Democrats wanting to back his campaign over the issue of public safety.

“I mean, my starting point is that I’m very confident not just that I’m gonna get into the top two for the general election, but I’m actually gonna win this race, because California is just so sick of what’s going on,” Hilton told The Daily Wire, noting that the state of the race “reflects the arrogance and corruption and entitlement of the years of one-party rule.”

“These Democrats assume that if they can just get into the top two, they’re gonna win,” he added.

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“I’ve heard this speculation that there may be two Republicans in the top two. We’ll see, but I’m just fighting to make sure I’m in the top two,” he later added, saying that issues like cutting taxes and lowering gas prices have been sticking points of his campaign.

There’s even been statewide races in California where only Democrats have made it to the top two, such as Kamala Harris and Loretta Sanchez in the 2016 Senate race.

Outgoing Governor Gavin Newsom has yet to endorse a replacement, and Sen. Alex Padilla notably decided against running for the position. Earlier this month, Proposition 50, which would add five Democrat-favored congressional seats to its map for the next three election cycles, passed by a wide margin, but Hilton says it should not be considered an indicator in the gubernatorial race.

“In the end, the Prop. 50 campaign wasn’t really about the lives of Californians and how they’re being made so difficult by the Democrats,” he said.

“I’m guaranteeing you, there’s going to be more, it’s not gonna stop here,” Bianco said regarding the pool of Democrats in the race.