Inflation divide: the wealthy splurge

In the US, the wealthy are spending more while the poorest have returned to living paycheck-to-paycheck. I expect this to continue (although I would prefer a different economic outcome). The wealthy have plenty of excess capital from the high market returns in the last decade, and some people will always struggle in the current US economic system.

(Public education and public libraries have improved many lifes, and can be high quality. There is no stigma there. Maybe because they are paid for with state taxes and local property taxes. Public housing and food assistance (WIC, food banks) have not been as successful, with a reluctance to widespread use.)

Inflation divide: The wealthy splurge, the poorest pull back, June 05, 2022
“At the high end of the spectrum, Nordstrom and Ralph Lauren reported stronger-than-expected sales as their well-heeled shoppers returned to pre-pandemic routines… Both Dollar Tree and Dollar General, which historically benefit from shoppers trading down during difficult economic times, raised their sales outlooks last month.”…

In the US, the wealthy are spending more while the poorest have returned to living paycheck-to-paycheck.

So, the helicopter money that was thrown around in 2020 has all been hoovered up by the “JCs” and we are back to our regularly scheduled program?

One tiny data point: Ford’s monthly sales.

Their lowest priced CUV, the discontinued, Indian built, Ecosport, sales down 44.5%

Next lowest priced, Escape, down 55.4%.

The also smallish Bronco Sport, down 36.4%.

The larger Edge up 81.2%

The even larger Explorer up 18.7%

The largest, Expedition, down 50.2%

Same thing with Lincoln

Smallest model, the Corsair, down 11.2%

Middle size Nautilus (tarted up Ford Edge) up 10.7%

Larger size Aviator (tarted up Ford Explorer) up 8.1%

Largest, Navigator, down 26.5%

All models are in stock. Ford has more thousands of Escapes and Bronco Sports in stock than they do Edges, but the Edge is seeing a large increase in sales, while the smaller models are shunned.

And these larger models are seeing sales increases in the face of daily media hysteria about soaring gas prices “with no end in sight”.

Ford boasts in it’s report:

"Ford SUV customers continue to opt for a
richer mix of high level models with more
content. In May, Ford SUV high series models
represented over 45 percent of retail sales,
which compares to about a third of our mix last
year. This has helped enhance average
transaction pricing, which hit almost $45,000
in the month of May up about $2,000
compared to April."