The affluence gap widens

[jpx7]

From a piece in the New York Times entitled "The Middle Class Is Steadily Eroding. Just Ask the Business World."

As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.

If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts.

[...]

Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.

More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.

[...]

While spending among the most affluent consumers has managed to propel the economy forward, the sharpening divide is worrying, Mr. Fazzari said.

“It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind,” he said. “We might be able to muddle along — but can we really recover?”

Mr. Fazzari also said that depending on a relatively small but affluent slice of the population to drive demand makes the economy more volatile, because this group does more discretionary spending that can rise and fall with the stock market, or track seesawing housing prices. The run-up on Wall Street in recent years has only heightened these trends, said Guy Berger, an economist at RBS, who estimates that 50 percent of Americans have no effective participation in the surging stock market, even counting retirement accounts.

Beyond the issues specific to the strength of the US economy as a whole: it's obviously not a positive trend to see that the ever-faithful market is hurtling towards a state in which the only economically viable ventures are those bargain-bin businesses serving the poor majority and top-of-the-line brands servicing the consumer habits of the gilded oligarchy.

 

[yeezus]

I do not understand what's so hard to understand about the fact that a widening gap in wealth is bad for everyone except those who are loaded. It hurts the middle class, and even upper-middle, yet the widening gap gets defended by those it hurts. Mind-boggling.

 

[zitothebrave]

I do not understand what's so hard to understand about the fact that a widening gap in wealth is bad for everyone except those who are loaded. It hurts the middle class, and even upper-middle, yet the widening gap gets defended by those it hurts. Mind-boggling.

KEEP YER HANDS OUT OF MY POCKETS

 

[weso1]

I do not understand what's so hard to understand about the fact that a widening gap in wealth is bad for everyone except those who are loaded. It hurts the middle class, and even upper-middle, yet the widening gap gets defended by those it hurts. Mind-boggling.

It's not necessarily bad. Just because the gap is getting wider doesn't mean those in the lower and middle class aren't seeing a prosperous wealth increase. I mean if the wealthy are seeing an annual increase of 20% and middle class are seeing an annual increase of 10% then that's not so bad even though the wealth gap would be widening. Now, that's not really happening in real life, but I'm just saying that what's more important is that the middle class is slumping rather than the gap getting wider. And just because you lower that gap doesn't mean you're doing the middle class any favors.

But that aside the real difference between libs and pubs isn't about those who want to fix it the middle class slump and those who don't. The real issue is how to fix it. So much of that money is being made in investments and middle class just don't really have a good chance to invest. It's not a simple problem. Economics is complicated and not really a science. Even just tax and redistribute isn't as easy as it sounds since we've become such an international economy these days.

 

[zitothebrave]

Why isn't anyone talking about the big risk with children who'll now suffer from affluenza

 

[gilesfan]

Its the rich peoples fault!!! Not the people that would rather take handouts.

where is the stake? BURN EM!

 

[zitothebrave]

Its the rich peoples fault!!! Not the people that would rather take handouts.

where is the stake? BURN EM!

 

[Oklahomahawk]

That's what Repubs HAVE to tell themselves Zeet. The real truth is way too disturbing, the fact that now the top 20% own 90% of the wealth. That is too much information for them to process. Remember these aren't TEA baggers or Talk radio junkies (at least for the most part), they are good people, they just believe the wrong people, users and usurpers, for too long and now they can't bring themselves to break away from that comfortable old way of thinking. If they did they're afraid they might become "liberals" or something. So they keep on parroting the old Reagan-esque catch phrases (well there you go again). I think we should probably all practice our violin lessons so that we too can fiddle while our Rome burns. It's like the folks on the Titanic who didn't believe the damn ship really was going down until they couldn't tip toe enough to keep their heads above that icy water any more.

 

[zitothebrave]

I generally agree with you OK. People falling into the traps of the left and right are conned into this cycle that just continues to hurt the middle class. Folks like thethe and gilesfan think they're wealthy to a degree or will be wealthy, when in fact they're not even remotely close to that level and unless they become CEOs of multinational corporations never will.

Same thing with the dems who want to raise income tax. They don't realize that any rich person with half a brain doesn't have much of an income. They turn it into options quickly if they aren't offered as such. So raising income tax doesn't touch them as they're in capital gains territory.

 

[gilesfan]

I am not wealthy and will never be unless I hit the lottery. As long as I can provide for my family, I will be happy. I was the first person in my family to even graduate college so I think I have perspective on wealth (or lack thereof)

 

[zitothebrave]

I am not wealthy and will never be unless I hit the lottery. As long as I can provide for my family, I will be happy. I was the first person in my family to even graduate college so I think I have perspective on wealth (or lack thereof)

It all makes sense now.