7 ms·
Wealthy Americans fuel half of U.S. economy consumer spending
- walterbell 2y agohttps://archive.is/7CA3p https://archive.is/7CA3p
- gunian 2y agohehe i love the barons in each country they have a different approach to social engineering
- ttyprintk 2y agoI see the graph, but I'm not sure this is very different from years gone by. Maybe 10 years ago, the top 10% of Americans accounted for 50% of travel expenses. Politics feels more significant: Trump-voting counties have never made up more than 36% of GDP.
- jarsin 2y agoA good macro economist I follow who called the spy 350 bottom and this entire runup back when everyone was bearish has been saying we are in a have vs have not economy since covid. And that is in part what drives the markets higher and higher. Majority are bearish and skittish but economic numbers keep printing like everyone is flush. He is calling for a blow off top followed by a deflationary bust fwiw.
- pinkmuffinere 2y agoTLDR: your guy is probably overconfident about his prediction. Even if your guy is actually super brilliant, and not over-confident, there’s no way for us to verify that. Therefore there’s no good reason to trust him more than average. Unfortunately these kind of predictions are impossible to trust, even if the predictor is known to make good calls. Michael Bury called the 2008 financial crisis and made a killing off of it. Since then he’s been periodically predicting a water-scarcity-driven recession, deleting and undeleting his twitter every couple of years. It never happens. Even the best economist can’t predict the timing of these things. If somebody believes they _can_, that just makes me suspect that they’re not wise enough to know they can’t predict it, and probably aren’t very skilled. Or maybe they’ll be the first to get it right — but how could I confirm that, without blind faith?
- jarsin 2y agoThe difference between him and Burry is his macro forecast doesn't change. Actually watching guys like Burry grasp at straws after they got one big one right is in large part why I am an even bigger believer in this forecast. For example Trump and tarrifs have nothing to do with his forecast whatsoever. It's a long term macro forecast that trumps presidents etc.
- immibis 2y agoOn any given day there are probably a thousand reasons the economy should fall apart tomorrow, and yet somehow it doesn't. Sometimes someone calls out one of the reasons on the exact day it falls apart tomorrow, and they feel like a god, but they just got lucky.
- pinkmuffinere 2y agoCoincidentally this is a very concise summary of the book "Fooled By Randomness". Bet you didn't know you were writing a book summary, but sometimes it just happens by chance :)
- logicalfails 2y agoWhat is his name? Or are you referring to the author of the article linked?
- jarsin 2y agoDavid Hunter https://x.com/DaveHcontrarian/with_replies https://x.com/DaveHcontrarian/with_replies
- robocat 2y ago10 comments: https://news.ycombinator.com/item?id=43167448 https://news.ycombinator.com/item?id=43167448
- refurb 2y agoThe error I always see in these analyses of income percentiles, while not always explicitly stated but but usually inferred, is that the income groups remain static. But this isn't true. This analysis of churn shows households move across income quintiles over a decade. https://www.clevelandfed.org/publications/economic-commentary/2016/ec-201606-income-inequality-and-mobility https://www.clevelandfed.org/publications/economic-commentar... For the 2nd to the 5th quintile, only 3% to 23% of households are still in the same quintile a decade later. Among the lowest, it's higher at 64%, which may seem disconcerting, but one must recognize that retirees would fall in that group and often have low income for the duration of their retirement as they live off savings. And intuitively this makes sense - people leave home to start careers often make low incomes and see progressively higher income until retirement, at which point they see a large drop incomes. So while it may be true that the wealthiest American fuel spending, that group of wealthiest Americans is constantly changing.
- _delirium 2y ago> For the 2nd to the 5th quintile, only 3% to 23% of households are still in the same quintile a decade later. I think you're misreading the table? Table 1 says that 72% of 5th-quintile households were still in the 5th quintile a decade later.
- refurb 2y agoI was referring to movement to a different quintile.
- b112 2y agoit's higher at 64%, which may seem disconcerting, but one must recognize that retirees would fall in that group and often have low income for the duration of their retirement as they live off savings. This worries me, as we're now top heavy, and therefore a larger percentage of our population is retiring over the next decade.
- rayiner 2y agoI’d be curious to see this broken down further. Consumer spending seems to me a better way of measuring wealth, as in wealth inequality for public policy purposes than paper wealth reflected in stock valuations.
- gruez 2y agoIn general: consumption inequality < income inequality < wealth inequality https://cepr.org/voxeu/columns/consumption-and-income-inequality-us-1960s https://cepr.org/voxeu/columns/consumption-and-income-inequa...
- ncallaway 2y agoWhich is why consumption taxes tend to be some of the more regressive forms of taxation we have. If you’re poor, you tend to have to spend a much higher fraction of your wealth on consumption just to survive.
- BobbyJo 2y agoI feel like a sales tax coupled with a 0% rate on the first X$ of spending would be a sweet spot. Could use a card or something to track taxes per person spending at the register. No tax filing, still lower rates for poor people. That'd be nice.
- cogman10 2y agoHow would you track it? But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). Sales tax only explicitly favors wealth concentration. The more money you have the more you can defer and invest to accumulate more wealth. If you don't have enough money then it's impossible to ever start accumulating.
- cratermoon 2y agoYeah, so 10% of Americans own half the wealth, of course they're going to be half the spending.
- sympil 2y agoWhy “of course”? It’s not clear to me why that would the case. For instance, we wouldn’t expect the top 10% to account for 50% of all food consumption simply becuase they control 50% of the wealth.
- cratermoon 2y agoYes we could. Wealthy people eat more expensive food. Sometimes insanely more expensive. While the majority of Americans are debating whether or not to buy a dozen eggs this week, a wealthy man is spending a million dollars a year to feed themselves. https://www.youtube.com/watch?v=HyABU75DKjA https://www.youtube.com/watch?v=HyABU75DKjA
- sympil 2y agoI said food consumption not amount spent on food. The two are different. The top 10% don’t consume 50% of the caloric intake of the nation.
- cratermoon 2y agoI knew you'd say that, so I already have my answer: you're substituting your own definition of 50% for the articles definition: consumer spending. I'd say you're moving the goalposts but trying to change "amount spent as an economic measure" to "caloric content" is more like looking at a football field and asking where home plate is.
- ninetyninenine 2y agoMaybe it's not clear to you because you're one of the wealthy people?
- DisjointedHunt 2y agoA big issue at the core of this phenomenon is the Fed funds rate and access to capital. It has never been clear to me how having a single universal funds rate for the entire economy would prevent this very scenario of diverging fortunes between those with large capital reserves and those without. In the name of fighting inflation, small businesses now struggle for access to cheap credit and have been under stressful conditions for years now while richer American entities continue to bid up prices of luxury items and average home prices. The reality on the ground is far more dire than what the headline metrics show as we see an entire generation push up average duration of long term credit like car loans or home loans and thus set themselves back from otherwise needed population milestones by a decade or more right now. The old cliche about "The first Million dollars is the hardest, but the next Million is an eventuality" comes from this very phenomenon we're seeing. There has to be a better way for the Fed to have a fine grained approach at applying friction to money supply and credit rather than hitting everything in the economy at once.
- dragontamer 2y agoIncome Tax
- throwaway5752 2y agoThe wealthiest 10% of American households—those making more than $250,000 a year, roughly—are now responsible for half of all US consumer spending and at least a third of the country’s gross domestic product. As of Q3 2024, per https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/ https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr..., the wealth held by the top 10 percent was $107T. The other 90% was $52T. The top 10% has 67% of the wealth and only contributes half of consumer spending and a third of the GDP. They doing less than their fair share.
- usernomdeguerre 2y agoHow does this compare to other developed nations currently? Or developing nations on the cusp of modernization? Is this a contemporary trend or an outlier?
- cootsnuck 2y agoBut that doesn't go along with the narrative.
- zuminator 2y agoThe Fed's chart is talking about actual wealth, but Bloomberg, despite saying "wealthiest," is really talking about the top 10% income earners. So it's not an equivalent comparison.
- CrazyStat 2y ago> They [are] doing less than their fair share. This wording makes it sound like consumer goods and services are the moral things to spend money on and wealthier individuals are slacking. This is silly. There are many good things other than consumer spending that wealthy people can and do spend their money on: capital investments for new or growing businesses, philanthropy, research, etc. etc. etc. In fact it would probably be better if wealthy people spent less money on consumer (luxury) goods and services and more on these other things—if they were, in your words, even farther from “their fair share.”
- throwaway5752 2y ago
- drivebyhooting 2y agoAs a wealthy American with a massive spending problem, I’ll say there’s diminishing returns. You can spend a huge sum on organic groceries, and ski lift tickets. Is it 100x better than my former WoW subscription and $10 university food? Not really.
- DisjointedHunt 2y agoBeing able to fly international in Business Class for annual vacations should you choose to is a choice many would consider 100x better than $10 University food.
- drivebyhooting 2y agoSure. I didn’t make my point clear. 100x expense doesn’t mean 100x utility. There are a lot of “consultants” in HCOL cities grifting from high earners. I had a baby proofer try to charge me 4 grand for a handful of outlets and corner pads.
- js2 2y agoThat's not grifting. The baby proofer asked a high price. You declined. No one was conned.
- kylehotchkiss 2y agoBaby proofer is a job that people hire for??
- snapplebobapple 2y agoyah, rich people are extremely stupid in ways that doesn't really hurt them because it's a small portion of their income. How jimbo might do something stupid and spend 10% of his disposable income on scratchers trying to get rich, rich people do the same, it's just 10 % of their income is a large number and they are usually chasing convenience or experience rather than riches.
- deleted 2y ago
- CSMastermind 2y agoIt's interesting to me that people worried about wealth inequality are normally also very supportive of free trade policies. A lot of the concentration of wealth comes from the fact that economically there is capital, goods, and people. We made it super easy for capital to flow around the globe, moderately easy for goods to flow around the globe, and difficult for people to flow around the globe. An Apple phone made in China, sold in South Africa, still sends money (capital) back to the US. This lets a few people gain extraordinary leverage at the expense of the lower ends of the curve in the United States who have seen their jobs shipped overseas.
- pokstad 2y agoNot Bernie, but we know what happened to him when he tried to change things.
- potamic 2y agoYou can support both. Most people concerned about inequality are usually in favour of some sort of wealth tax. It's a tax on individuals, not corporations.
- daveguy 2y agoIt's more like a tax on hoarding.
- throwccp 2y ago[dead]
- femiagbabiaka 2y ago> It's interesting to me that people worried about wealth inequality are normally also very supportive of free trade policies. Huh, I’ve had the exact opposite experience, and now I’d love to talk to someone who holds the beliefs you described.
- nickpsecurity 2y agoThat's overly simplistic. In the Apple scenario, it enriches the partners in the other countries (eg Foxconn), many retailers worldwide, and employees and shareholders. The latter might not be American. Many firms are multinational with money flying in all kinds of directions, even friendly governments. So, what you say is correct in some ways. Some do get more leverage while others jobs are shipped overseas. Who is getting leverage is every party benefiting from these arrangements. Interesting enough, that includes companies in U.S., South Africa, and China.
- matesz 2y agoFor anybody still cofused about taxation and what are solutions, please check Gary Economics YouTube channel. He is ex trader, few years rated best at Citibank, and is making very easy to understand educational videos on what wealth inequality is and why the rich are getting richer and poor are getting poorer. Normally I wouldn’t recommend a channel, but this one is such a gem it’s a sin not to recommend it. Watched a lot about economics and taxes before, overwhelming majority of explanations are poor and a frankly a joke.
- methou 2y agoLast time I called my mom who's in Beijing, she says that economics doesn't seem very good at the moment, many shops and restaurants has closed, but there are more luxury shops popping up. Looks like similar in the US.
- poisonborz 2y agoHow is this a reason for anything? Feudal lords provided 100% of paid jobs at the time, yet this was not a reason to keep that system.
- Eddy_Viscosity2 2y agoalternative title: "People who have all the money, have all the money" I mean, of course? Are they going to follow up with a study showing that women are responsible for a huge portion of the birthrate?
- deleted 2y ago[deleted]