Several of the nation’s largest lenders this week gave investors updates on how their businesses have fared in the second quarter, and the consensus was overwhelmingly positive.
What we appreciate and what much younger people appreciate here are two different things.
We have been to this BBQ before. No need to be roasted on the spit.
The youth in the market do not know they are gambling at the top of the market.
The gurus are selling ad space to them. Plus, if you look at the charts, what is not to love? Higher highs. Get high!
The oil shock in the EU is about to come into focus. The US will be next. China’s consumers will be bankrupt.
This is all going to come crashing down now. Not next year. Now. The Hormuz opening would not save us. The oil pumps and refineries in the gulf need months to get back up and running. It is too late.
Very true Hawkwin.
The federal government used to be concerned about Main Street & the Wall Street. No longer just Wall Street now.
I guess those are the by gone days.
This is also up there with just in time manufacturing practices that are about to collide with an oil shock. Incomes and employment will drop out hard.
Courtesy of Google
Roughly 40% to 50% of high-income earners are considered financially strained or over-leveraged. While top earners hold the majority of U.S. wealth, data indicates that about 40% of households making $300,000 or more live paycheck-to-paycheck, and nearly half of the six-figure bracket is financially vulnerable due to heavy debt burdens and lifestyle creep.
[image]USAFacts +3
To gauge personal financial health or assess your debt-to-income ratio, you can utilize the Federal Reserve Survey of Consumer Finances for benchmark data, or use the Bankrate Debt Calculator to analyze your own leverage.
What “Over-Leveraged” Means for High Earners
Lifestyle Inflation: High earners take on larger mortgages, car notes, and private schooling costs. When combined with economic fluctuations, these fixed monthly obligations eat up excess cash, leaving very little actual wealth generation despite large salaries.
[image]Investopedia +2
Debt Concentration: Paradoxically, higher-income households hold a massive chunk of overall consumer and education debt because they have easier access to high credit limits and large loans.
[image]Brookings +1
Paycheck to Paycheck: Because of heavy debt servicing and lifestyle choices, 40% of individuals earning $300,000 or more report finding themselves in the paycheck-to-paycheck cycle, with many noting their debt is causing them significant stress.
New Pittsburgh Courier +1
The Broader Picture
Despite these vulnerabilities, the top 20% of earners still hold a historically high share of the country’s total wealth and account for roughly 63% of all consumer spending in the U.S.. This creates a bifurcated reality: while millions of high earners are heavily indebted and “walking on eggshells”, their top-line income and assets generally shield them from the economic hardships faced by lower-income tiers.
Living paycheck to paycheck just means more monetary velocity for a broader proportion of the population.
It’s generally cited that near as makes no difference 100% of money you pay poor people continues circulating through the economy. The data recently shows that this proportion of high velocity money reaches much higher into the socioeconomic tranches of our populations.
I live paycheck to paycheck as well. 95%+ of my paycheck is ear marked for payments.
The payments I make to my savings and retirements also enter the stock market economy - just as fast as it clears my bank.
Living paycheck to paycheck is generally understood to exclude what people “pay” into retirement. The Personal Savings Rate is going down, that is bad.
Without a cushion of money to pay for emergency situations, people become more leveraged. Higher interest rates on debt will impact personal consumption habits. Yada, yada, yada.
