"I wanted to ask you about how the higher-income households are really driving spending right now that are backed by home equity and stock market wealth, but lower-income consumers are really struggling with the accumulation of five years now of rising prices. It's price levels, not really the inflation rate, holding some of these families back. How sustainable is this so-called K-shaped economy?"
"We hear about this a lot. If you listen to the earnings reports for consumer-facing companies that tend to deal with low- and moderate-income people, they'll all say that we're seeing people, tightening their belts, changing products that they buy, buying less, and that sort of thing. And so it's clearly a thing. It's also clearly a thing that, asset values-housing values and securities values are high, and they tend to be owned by people more at the higher end of the income and wealth."
A K-shaped economy is emerging in the U.S., with wealthier households benefiting from high housing and securities values while lower-income households face rising consumer prices for staples like food and energy. Consumer-facing firms report that low- and moderate-income customers are tightening belts, switching products, and buying less. Higher-income households are driving much of current consumption, often backed by home equity and stock market wealth. The divergence between asset-driven prosperity and price-driven hardship raises concerns about sustainability and the potential for prolonged unequal economic recovery.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]