The unrest began last month, when students took to the streets to decry the lack of investment in education, highlighting run-down classrooms, missing teachers, and buildings that aren’t equipped for rising temperatures.

Others later joined in solidarity while also denouncing police tactics against student protestors. Eventually, the demonstrations focused on the high cost of living and rising fuel prices, which have jumped due to the U.S. war on Iran.

The unrest has coincided with a steep acceleration in inflation. Consumer prices rose 3.4% in September from a year earlier, the fastest pace since January 2024 and up from August’s annual rate of 2.6%.

To be sure, France isn’t the only country suffering from higher inflation. Prices are up everywhere, including in the U.S., where affordability is the main issue in midterm elections that are expected to punish Republicans severely.

But the backdrop in France is especially gloomy. For instance, already-tepid economic growth has been slowing. The government lowered its 2026 forecast to just 0.5% from 0.7% after GDP expanded 0.9% in 2025.

Meanwhile, the average negotiated wage increase was 1.7% in the second quarter and has largely remained flat for several quarters, according to the Bank of France. Unemployment also tops 8%, with youth joblessness at 20%.

The combination of slow growth, high inflation, profligate spending, and soaring debt has stirred a revolt on financial markets. In recent weeks, French bond yields have jumped to the highest levels in 24 years, flashing warning signs not seen since the eurozone debt crisis in 2011.

Investors also have little confidence that fiscal prudence will return anytime soon. The front-runners in the French presidential election in the spring are from the populist far right and far left.

Mujtaba Rahman, managing director for Europe at Eurasia Group, said France is suffering from a crisis of liberal democracy, a crisis of fiscal mismanagement, and a crisis of youth disaffection.

“But the fiscal crisis is the most dangerous, underlying many of the country’s woes and threatening to bring it to ruin,” he wrote in a New York Times op-ed on Thursday. “France, truly, is on the brink.”

Of course, the U.S. also has its share of political dysfunction, which has helped enable the national debt to explode to $40 trillion with no sign that massive budget deficits will be reined in.

But the U.S. also enjoys the “exorbitant privilege” of the dollar’s status as the global reserve currency and a strong economy that’s been powered by the AI spending boom. GDP rose 2.2% in the second quarter, and third-quarter growth is expected to heat up further to 3.6%.

The U.S. jobless rate is just 4.2%, signaling full employment, and youth unemployment is about 10%. Wages have also been robust with yearly growth tracking around 3.9%.

That all helps take some of the sting out of 3.7% annual inflation as measured by the latest consumer price index. While it has eroded wage gains, Americans continue to spend.

Corporate earnings have also kept booming as well, helping stocks stay near record highs. And while U.S. bond yields have surged past 5%, it partly reflects faster GDP growth.

In fact, the Federal Reserve hiked rates last month and is likely to raise them further as the resilient economy keeps upward pressure on prices.

“The economy is less rate sensitive than it has ever been because it is more services-heavy, increasingly supported by wealthy and lightly indebted retirees, and stimulated by large fiscal deficits and an extraordinary AI investment boom,” market veteran Ed Yardeni wrote in a note last month. “At the same time, strong demand for capital and weaker growth in national saving may have pushed the neutral interest rate higher. That’s why higher interest rates haven’t produced the widely expected effect of weakening economic growth with a lag, nor do we expect they will.”