The core contradiction in the current economy is structural: supply exceeds effective demand. This is not absolute overcapacity across all industries, but a differentiated, squeezing imbalance.
Starting with consumer goods: manufacturing capacity across many sectors is ample. Daily necessities, home appliances, clothing, and ordinary industrial goods are in abundant supply, with prices trending downward and competition intensifying. But the problem is not on the supply side. It is that effective purchasing power cannot keep up. It is not that people do not need these goods. It is that their disposable income is shrinking and their consumption behaviour is contracting.
On the services side, the situation is equally visible. Too many people have piled into catering, advertising, marketing planning, and new media, while AI-driven substitution has driven down prices for freelance work. More shops open, but the general public spends less frequently, only splurging during holidays, leaving most days quiet.
If this structure continues to evolve, it forms a self-reinforcing cycle. AI and industry competition reduce white-collar incomes. Lower incomes mean less spending. Less spending means lower revenue for businesses. Lower revenue leads to further lay-offs. More lay-offs mean even lower incomes for more people. The end result is a peculiar state of affairs: goods are abundant, prices are not skyrocketing, but ordinary people feel their purchasing power shrinking.
Two common misconceptions need correcting. The first is that every industry is in oversupply. In reality, low-end homogeneous supply is indeed excessive, but high-end customised services, specialist healthcare and elderly care, and scarce technical roles remain in strong demand. The second is that a crisis will erupt overnight. In reality, this is a long, slow squeeze. Essential goods remain stable in supply, and there will not be the kind of large-scale collapse seen in classical economic crises.
The value of understanding this structure is that seeing the trend is more important than working harder in the wrong direction. In an environment where supply exceeds demand, the only way out of the rat race is to move toward higher value-added and scarcer offerings.