(C) Daily Kos
This story was originally published by Daily Kos and is unaltered.
. . . . . . . . . .



Bloomberg: Half USA's Spending By Only 10% Of Wealthiest. Article Ends W/Warning. [1]

['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']

Date: 2025-03-03

Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost?

Industries get recalibrated, economic signals get crossed, and the social fabric begins to fray.

snip

Such a high concentration of financial resources presents a whole host of risks and complications, including general economic fragility. If the extreme spending habits of a small group of people are what’s keeping a large portion of the economy churning, then that group of people also has an outsize ability to bring everyone else down with them. “I’m not comfortable with it,” says Mark Zandi, the chief economist for Moody’s Analytics and the author of the company’s recent analysis of what he calls “the wealth effect.” In a well-functioning economy, he explains, the spending would be “more widely distributed and the economy less at risk of something going financially wrong for that top group of individuals.”

snip

In Zandi’s estimation, that risk is currently quite real. In the US, high earners tend to be older, and they’re feeling flush in large part because of homeownership and investments in the stock market , which has soared to new heights on the ballooning valuations of a very small number of tech companies making similar bets on the future of artificial intelligence. “The market feels, at best, at the high side of fair value, probably more likely overvalued, bordering on frothy,” Zandi says. “When you have a highly valued market, everything has to go right. And certainly what’s going on in Washington doesn’t lend confidence to everything going right.” All indications suggest that the Donald Trump administration intends to make good on its promises to wage a multifront trade war , among other things, which portends volatility even in the best-case scenarios.

When you put a huge proportion of a nation’s total resources in a small number of hands, that distortion also plays out in the everyday economy. Consumer-facing companies want earnings growth and need ways to hold on to their profit margin if components or labor become more expensive. An easy way to do that is by going upmarket to find buyers who are spending freely. You can see how this has played out in the car market: Automakers have pushed to develop more of the big, pricey SUVs that wealthier buyers prefer and devoted fewer resources to smaller, more affordable models. That’s helped push the average sale price of new cars up more than 50% since 2014, according to a Cox Automotive analysis of data from the Bureau of Labor Statistics. The average new car in the US now costs almost $50,000. When the math on producing goods and services only pencils out when you’re selling to the rich, it doesn’t just change the availability of designer handbags or hotel suites; it affects how entire industries organize themselves.

snip

envoy.east-us.cumulus.bloomberg.com/...

[END]
---
[1] Url: https://www.dailykos.com/stories/2025/3/3/2307518/-Bloomberg-Half-USA-s-Spending-By-Only-10-Of-Wealthiest-Ends-Article-W-Warning?pm_campaign=front_page&pm_source=more_community&pm_medium=web

Published and (C) by Daily Kos
Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified.

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/dailykos/