Navy Federal Credit Union Chief Economist Heather Long dismantles Scott Bessent’s distorted picture of the US economy and explains how it’s heavily weighted for the wealthiest Americans.
After describing the US economy as Domino’s instead of wood-fired gourmet pizza, Long said much of the economy’s strength relies on “spending by the richest Americans,” or, as she describes it, “this K-shape economy.”
LONG: Yeah, this K-shaped economy, I started using the term a year ago and it really caught on. And basically, it’s the notion that most of the spending in the economy is coming from the top 20% of earners.
So these are people in America who are earning about $170,000 or more. And their reality is just totally different from everybody else in the bottom 80%.
And so that’s the K, the sort of diverging top 20% continues to live La Vida Loca. They continue to travel to Europe.
They continue to spend on birthday parties, and weddings and cars. Most new car buying is happening in this top 20% segment.
Meanwhile, in the rest of America, people are kind of treading water. They’re spending more and more at discount and warehouse stores. They’re really having to budget and economize.
And they’re feeling it. They’re feeling a financial squeeze.
Life hasn’t changed for the wealthy under Trump, no surprise there, but for the entire working class it’s a massive struggle.
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