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This Is A Big Problem For The U.S. Economy
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The top 10% are tightening their belts… Retail sales fell for two consecutive months for the first time in two years… Rising stock prices had made consumers feel wealthier – but… China is buying lots of gold… Porter shares wage-decline data on X… |
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On Friday, The Big Secret On Wall Street analyst Ross Hendricks detailed the growing disparity that has emerged between the top 10% of U.S. earners and the bottom 90%. Recent data shows that even the wealthy segment of society is slowing their spending, causing key sectors of the economy to signal trouble ahead… Today, Ross explores what drives much of that wealth-effect spending and what will happen to the U.S. economy if there is a major decline in the stock market.
Until recently, the growth in consumer spending by the top 10% of earners in the U.S. had been enough to offset the economic distress among lower-income households. But in the last several months, it’s become clear that even the top 10% are tightening their belts.
And this spreading consumer distress is now showing up in macroeconomic data. In January, U.S. retail sales fell by 1.2% year on year (“YOY”), marking the largest drop in three and a half years. Dispelling theories of a one-off, cold-weather anomaly driving the January number, February retail sales data came in well below expectations, and posted a consecutive monthly decline – marking the first back-to-back monthly decline in retail sales in over two years:
And all signs point toward a further deterioration in consumer spending. The University of Michigan’s Consumer Sentiment Survey showed that the expected change in consumers’ financial situation over the next year fell to the lowest level ever recorded in the 50-year history of the survey:
