Mark Zandi, the chief economist at Moody’s Analytics, highlighted the role of the wealthy in driving the U.S. economy.
Top 20% US Households’ Spending Outpaces Inflation
Zandi took to X to point out that the spending of the top 20% of U.S. households has significantly outpaced inflation since the pandemic.
He also highlighted the disproportionate spending of the top 3.3% of the income distribution. According to the economist, the U.S. economy is heavily reliant on the spending of these well-to-do individuals. He warned that any reduction in their spending could spell trouble for the economy.
“The data also show that the U.S. economy is being largely powered by the well-to-do. As long as they keep spending, the economy should avoid recession, but if they turn more cautious, for whatever reason, the economy has a big problem,” wrote Zandi.
Zandi Warns Of 48% Recession Risk Amid Rising Inequality
This observation aligns with Zandi’s previous warning about the 48% probability of a U.S. recession within the next 12 months. Zandi warned on X that Moody's new machine-learning-based economic indicator signals an unprecedented recession risk, adding to his ongoing concerns about a worsening "jobs recession."
Earlier, data from the Bank of America Institute revealed a growing financial divide in the U.S. economy. Higher-income households were spending more and experiencing stronger wage growth, while lower-income households were feeling increasingly left out.
Interestingly, Jamie Dimon, the CEO of JPMorgan Chase, had spoken about growing income inequality in the past, suggesting that the key to fixing it is growing the economy for everyone. “The wrong part is that the bottom 30% didn’t do better… “Not that the top 0.1% did so well,” stated Dimon boldly.
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