We know the rich are getting richer & receiving more of the national income thus making income inequality worse.
Yet
Those profits must be coming from somewhere as the working class & middle class struggle.
And where are the corporate profits going?
The plebes were never needed. Now is the middle class in that category?
Has the the US morphed into a capitalist pre WW 2 British class style society which was reminiscent of feudalism?
Look to Putin’s Russia for an economic model. A corrupt kleptocracy where the leader and the oligarch class control the vast majority of the nation’s wealth.
“American companies are buying back their own stock at a record pace, even as stock prices are at all-time highs.”
Didn’t get much past the first sentence. It is a market of stocks not a stock market. There are plenty of undervalued stocks where it would make sense for company buy backs to occur, LYB as an example, and there are overvalued stocks that it would be ridiculous to back back, OKLO.
Didn’t they put a tax on stock buy backs? Did it make a difference?
Another aspect of our bifurcated economy. Big Beautiful Bill mostly helped corporations. Intended to grow the economy. With help from lower interest rates. And resulting in higher stock prices—benefitting investors and mostly the wealthy.
Meanwhile consumers are squeezed by rising cost of living and limited increase in income. But administration working to reduce cost of living. Lower oil prices. Bragging abt lower egg prices. Argentina beef deal to reduce meat prices.
And then there’s the tariff issue. Will tariffs drive up cost of living (and fund govt spending) or will deals with key countries limit impact? And will tariff deals get other nations to reduce barriers to U.S. products boosting the economy?
Saying so don’t make it so.
Let’s talk about eggs. Egg prices increased dramatically because of bird flu. If the administration was really interested in solving future egg price spikes, they’d research how to minimize and contain future outbreaks. Instead -
Where’s the beef? If you think the Argentina beef deal is aimed at reducing meat prices, you must also think the Brazil beef tariffs are aimed at increasing meat prices.
It’s less complicated than that…Argentina is being rewarded because their leader is someone’s buddy. Brazil is being punished because they actually had the nerve to hold their insurrectionist accountable. It’s really not about an effort to reduce beef prices.
Indeed. The issues around beef are particularly revealing. Argentina accounts for about 2% of U.S. beef imports. Canada, Mexico and Australia export far more to the U.S. Brazil exports a similar sum as Argentina to the U.S., but of course, Donald has big feelings about Brazil these days and slapped a 50% tax on imports from Brazil- meat and coffee are included.
So exactly how has Donald been working to reduce the cost of living? Press announcements aren’t policy.
The top 10 percent of U.S. households now account for nearly half of all spending, Moody’s Analytics recently estimated, the highest share since the late 1980s. Consumer sentiment has climbed among high earners but steadily fallen for other groups.
“This isn’t just an inequality story — it’s a macroeconomic story,” said Lindsay Owens, executive director of the Groundwork Collaborative, a progressive policy group. “As the wealthy continue to consume, that’s masking more and more insecurity and instability in the economy under the hood.”
Credit card companies are competing to offer ever-more-expensive cards to high earners who are happy to pay the annual fees in return for exclusive perks — while lower-income households are struggling to make minimum payments on their debts.
“Visits across the industry by low-income consumers once again declined by double digits versus the prior year period,” Christopher J. Kempczinski, chief executive of McDonald’s, said on a recent earnings call. “This bifurcated consumer base is why we remain cautious about the overall near-term health of the U.S. consumer.”
Slower wage growth, combined with persistent inflation, is straining many families’ finances.
Those strains have not resulted in widespread defaults, bankruptcies or foreclosures. But high debt balances mean that even people who are keeping up with payments have little room to borrow more if their costs rise or their incomes fall.
For people who are out of work, finding a job has already gotten far more difficult. Nearly two million Americans are considered long-term unemployed, the highest since the pandemic.
Even middle-class families are suffering.”
“The only groups that feel good about the economy now are making over $200,000 in the surveys and have large stock portfolios,” Swonk said.
Inflation may be increasing at a slower pace than expected, the markets might be cheering, and the Fed will likely soon be cutting, but Diane Swonk isn’t popping Champagne.
The veteran economist says the economy “looks better than it feels” because the very data used to measure it is eroding, and the illusion of resilience could shatter heading into the fourth quarter.
Swonk pointed out that many of the categories holding inflation steady are either insulated from tariffs or benefiting from temporary waivers: computers, smartphones, and some vehicle imports. Once those fade, “goods prices are still moving up,” she said, with few signs of broad-based disinflation. Core services less shelter—a metric the Fed watches closely—rose about 0.4% in September, Swonk estimated, and remains more than 3% higher than a year ago, “well above anything we saw pre-pandemic.”
That stickiness, she warns, is amplified by a bifurcated consumer base, what some economists have called the “K shaped economy.” Affluent households continue to spend freely on travel, entertainment, and premium goods, keeping service-sector inflation stubborn. Lower- and middle-income consumers, by contrast, are pushing back, trading down, stretching budgets, or delaying purchases altogether.
“Retailers are feeling that divide,” Swonk said, describing a landscape where discount chains are seeing higher-income shoppers while subprime delinquencies creep up among those with thinner financial cushions.
The result is a headline inflation rate that understates the pain for the median household.
I’m sticking with the asset inflation theory:
And the theory of a low speed (for most people, asset bubbles aside), “few take most” economy:
Which might also put downward pressure on inflation from the demand side if the masses never have much additional consumption (always “just getting by”).
That sounds right as far as it goes. What happens, though, when most people don’t buy things? Not only does the demand side go down (inflation), but the supply side also goes down. Then fewer things are produced and the economy in general is reduced.
Bringing it back more directly to the OT, a thought experiment: how many “very wealthy” people (however that is measured - multi-millionaires, billionaires, etc.) are equivalent to a given number of non-wealthy people to make up for consumption in order to keep the economy rolling along? There are only so many iPhones, tvs, cars, dishwashers that a wealthy person can buy v. what almost all others will buy or want to buy. And similar with services such as healthcare, banking, law enforcement, insurance, transportation, etc.
Maybe that could be a new kind of Golden Ratio 
(or Iron Pyrite Ratio)
Pete
Economist Diane Swonk claims inflation is understated:
Swonk pointed out that many of the categories holding inflation steady are either insulated from tariffs or benefiting from temporary waivers: computers, smartphones, and some vehicle imports. Once those fade, “goods prices are still moving up,” she said, with few signs of broad-based disinflation. Core services less shelter—a metric the Fed watches closely—rose about 0.4% in September, Swonk estimated, and remains more than 3% higher than a year ago, “well above anything we saw pre-pandemic.”
Is she right? I dunno.
Agreed.
There is a supply side.
We’ll have - I think - lower gdp growth (maybe aside from asset-driven gdp, like an AI investment craze), what I called a “low speed” economy.
Perhaps the weakened consumer in the K economy will make inflation lower than it otherwise would be with our new, innovative trade policies.
A question for those following this thread.
Are at least 50% of Americans living in a second class nation very separate from the professional class & elites?
First let’s stipulate that income mobility has declined in the USA.
Chetty used a series of maps and charts to reveal the dramatic decline in upward mobility in the U.S. (especially for kids in low-income families)
*while more than 90% of children born in 1940 went on to earn more than their parents did — a cornerstone assumption of the American dream — children born in the middle of the 1980s only have a 50-50 chance of doing better than their parents. *
that this is no longer a country where it’s easy to get ahead, even through hard work,” Chetty said.
Things are just fine for those in the upper strata. 2009 was more than a blip but easily recoverable. Likely many Americans did not fully recover from 2009.
The upper strata controls business, government, & the media. And they report that the economy & unemployment & existing wages &housing are fine and dandy.
Yep for them.
Education, healthcare, housing and now new vehicles are incredibly expensive!
Very hard if not impossible for some to attain. And for those that did manage to get that sheepskin housing & vehicle costs plus college debt decimates their income. They may attain the living standard their parents had/have but likely at least a decade later.
For the unwashed, this is not a nation to live or the life they wish to lead.
2016 & 2024 presidential elections were a call of dissatisfaction with the current state of affairs.
Many are appalled that such an individual be elected let alone re-elected. That once he is gone-business as usual can continue. Fine for them. And I don’t see any establishment politicians calling for any change except for the removal of the person in the Oval Office.
But I don’t believe the status quo will cut it with the masses. And if change cannot be had at the ballot box; the streets will call to them.
By definition “establishment” people don’t want change because they are of the establishment.
I am pretty sure the majority of the opposition party have pushed for a more progressive tax code as well as more benefits on the lower end of the economy - heck that is why the government is currently shut down. It is a fight over economic mobility. If you can’t afford the risk of job change (and the cost of insurance while you may be unemployed), then you are less likely to ever pursue such.