It's a combination of both.

Consider Rivian which just went public at ~80B valuation (on revenue of 0, mind you). They raised ~10B dollars through investor capital and can now use that to create factories, hire employees and so on. Further, they can issue more shares down the line to finance their growth.

I agree that consumer demand is required to grow aggregate revenues/earnings, and create a stably higher economy. But in theory using investment capital to invest into productive capacity puts upwards pressure on wages, thus longer term consumption.

However, when capital is misallocated it may not result in productive growth.

That's right, the only thing PE is accomplishing is to inflate asset valuation, but the increase in economic activity is very marginal without robust consumer spending.

That’s a pretty silly thing to say in such a blanket way. R&D creates entire new segments of the economy.

This is the most frustrating thing about the current situation. We finally juiced the economy in a way that we've created a supply side constraint for the first time since at least 2000! People finally feel free to quit their jobs and demand higher wages! Of course, if you're a media company owner who's friends with other billionaires, you don't like this. So all of the coverage has been almost exclusively negative. Biden isn't helping himself by appearing to do nothing, but there's a lot of upside here.