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WSJ: "The top 10% of earners in the U.S. now account for 49.7% of all spending, a record in data going back to 1989. Three decades ago, they accounted for about 36%."
What is driving their disproportionate spending seems to be surging stock and property markets.
https://www.wsj.com/economy/consumers/us-economy-strength-rich-spending-2c34a571?mod=hp_lead_pos7
WSJ: "The top 10% of earners in the U.S. now account for 49.7% of all spending, a record in data going back to 1989. Three decades ago, they accounted for about 36%."
What is driving their disproportionate spending seems to be surging stock and property markets.
https://www.wsj.com/economy/consumers/us-economy-strength-rich-spending-2c34a571?mod=hp_lead_pos7
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Or the company that named itself after the Metaverse it dumped tens of billions in.
They and the rest, rely on AI hype, as they don't have usable products.
It's all just memes.
This is very worrying. US consumption spending seems to depend heavily on the creation of what Charles Munger described as "bezzle", expanding John Kenneth Galbraith's definition of the word to describe a temporary, unsustainable increase in wealth.
https://carnegieendowment.org/china-financial-markets/2021/08/why-the-bezzle-matters-to-the-economy?lang=en
This means that growth in the US economy has become overly reliant on even faster growth in the value of stocks and property, and of course in the longer term, the latter can only grow as fast as the former.
If we do see any sharp correction in US stock and property markets, the risk is that it sets off much slower consumption growth, and this, the main driver of economic growth, will cause total growth to drop in a self-reinforcing loop.
American over-reliance today on asset prices to drive growth is much like the late 1920s, another time of very high levels of income inequality in which economic growth was driven by the spending of the stock- and real-estate-owning rich.
As an aside, it is remarkable the extent to which the US and China – in spite of major structural differences – have become mirror images of each other in their over-reliance on rising debt and overvalued assets to drive economic activity.
Whereas property and stocks seem to be the main sources of bezzle creation in the US, in China it was overvalued infrastructure and property, now in the process of becoming overvalued infrastructure and manufacturing capacity.