Your raise used to go offshore. Then it went to a buyback. Now it’s going to a data center

For four decades, the formula was simple: keep labor costs low, borrow cheap, return cash to shareholders. It worked spectacularly as corporate profit margins reached record highs, the S&P 500 compounded at historic rates, and the investor class got very rich. But that formula is now broken. According to Goldman Sachs’ global strategy team, what’s replacing it will reshape every asset class, every sector, and every assumption baked into modern portfolio theory. In a sweeping new research paper published Tuesday—Global Strategy Paper No. 76: The Post Modern Cycle, Navigating the Capex Boom—Goldman’s chief global equity strategist, Peter Oppenheimer, argued along with his team that the world has entered a structurally different investment era. It will be defined, he predicted, not by cheap capital and capital-light growth, but by rising real interest rates, geopolitical fragmentation and a synchronized surge in capital spending unseen since the postwar era. Oppenheimer’s note was principally focused, fitting for a global strategist, on how equity returns will be reshaped in a new regime. But underneath lies another question for the middle-class professional, familiar to anyone who has watched their paycheck stagnate while their 401(k) soared: where does the money go? For most of the past 40 years, the answer was: not to workers. The long squeeze To understand where we are, Goldman starts with where we’ve been. The firm’s analysts divide the post-WWII era into three distinct economic regimes, each with its own logic of wealth distribution. The Traditional Cycle, roughly pre-1980, was volatile and inflationary. Investors demanded high dividend yields just to tolerate equity risk. Returns were lumpy, macro variables swung wildly, and no single asset class dominated. The Modern Cycle, from roughly 1982 to the pandemic, was something else entirely. The Volcker shock had beaten inflation into submission. Reagan and Thatcher were dismantli