THE SET-UP: This economy is weird. The S&P 500 just hit another all-time high, and that comes during yet another gravity-defying market rally. Meanwhile, back on Planet Paycheck-to-Paycheck, the economy continues to be Americans’ top concern. Here are some data points of interest:
The University of Michigan’s monthly measure of consumer sentiment dropped to 55.4 in September, which is down from 58.2 in August and a decline of 21% year-over-year.
Statista Consumer Insights found that 49.1% of Americans see the cost of living as their biggest personal challenge.
And a FOX News poll asked Americans to rate the state of the economy and Trump’s handling of it. Seventy-one percent are down on the economy and 52% are down on Trump’s management of it economy. Just 30% are satisfied with Trump’s tenure.
Add all that to a cratering job market and persistent inflation (which just ticked up to 2.9%) and you get a good idea of the economic gravity that differentiates the majority of wage-earning Americans from the capital-hoarding elites who’ve achieved escape velocity. Fueled in large part by the massive bailout after the Crash of 2008, they are comfortably in orbit while gravity governs the rest of us.
That gloomy picture is why today’s retail sale numbers “beat expectations.” Per the National Retail Foundation:
According to data from the CNBC/NRF Retail Monitor, year-to-date, core retail sales are up over 5% through August as consumers continue to show willingness to spend on essential goods.
The good news made for upbeat headlines:
CNN: Against the odds, Americans are still spending
The National News Desk: Retail sales beat expectations as Americans keep opening their wallets
MarketWatch: Retail sales are strong for the third month in a row. Economy still seems to be in pretty good shape.
So, despite the factors weighing on the minds of millions of Americans, things are looking up … right?
Maybe it’s millions of Americans who are looking up … at orbiting elites who, according to Mark Zandi’s analysis of the sales numbers, are having a disproportionate impact on consumer spending:
Wealthy consumers continue to account for a growing share of US consumer spending, highlighting the lopsided strength of the economy as a slowdown in hiring and wariness among other income cohorts raise fears of a slowdown.
Consumers in the top 10% of the income distribution accounted for 49.2% of total spending in the second quarter, up from 48.5% in the first quarter, reaching the highest level in data going back to 1989, according to an analysis by Mark Zandi, chief economist for Moody’s Analytics.
Conduit Street dug a little deeper into the phenomenon:
Since the pandemic, households in the bottom 80% of the income distribution — those earning less than about $175,000 annually — have increased spending only enough to keep pace with inflation. Their personal outlays closely track the Consumer Price Index, indicating limited real growth in spending power.
In contrast, the top 20% of households have outspent inflation by a wide margin. Within that group, the very highest earners — roughly the top 3.3% of households — have seen spending accelerate most significantly, well beyond inflation or income growth further down the distribution.
Bloomberg’s upshot is that the top 10% is keeping the economy “afloat amid a decline in hiring and rising debt delinquencies.” Those are the gravitational forces the wealthy have risen above … far above, in fact. As Bloomberg explained:
Equity markets stand near record levels and property values remain elevated. That means many wealthier Americans have seen their net worth rise, encouraging them to keep their wallets open.
On one hand, that’s the least they can do after Quantitative Easing poured trillions of dollars into the supply side of the economy, thus empowering a frenzy of asset hoarding and stock inflation that exacerbated inequality and erected barriers to homeownership for wage earners who cannot compete with private equity or all-cash home buyers.
On the other hand, that also means a sharp pull-back from spending by the top 10% could trigger a recession … or worse. So, they’ve not only hoarded capital and assets … they’ve hoarded power. Or, at least, power has been handed to them by fifty years of Milton Friedmanism. As such, today’s economy is the apotheosis of a process that began in 1980 when the US voted for Milton Friedmanism when they voted for Reagan’s supply side solution to stagflation. It’s been a boom-bust-bailout-horde-repeat cycle ever since. In this last cycle, the bailout supercharged investment in Silicon Valley. The ensuing rise of tech “Unicorns” and surveillance capitalism helped fuel the rise in home and stock prices while wage earners struggled to recover from foreclosures and opioids. Now they are banking on the Fed to trigger a drop in mortgages that will, in turn, jump-start the dormant housing market. If it does, that will also drive home prices even higher. - jp
Why are stocks setting records when the economy feels down in the dumps?
https://www.cnn.com/2025/09/15/business/stock-market-dow-record-economy-jobs-inflation
The Dual Economy: Cracks Emerge in Consumer Financial Health Amidst Rising Loan Delinquencies
https://markets.financialcontent.com/stocks/article/marketminute-2025-9-15-the-dual-economy-cracks-emerge-in-consumer-financial-health-amidst-rising-loan-delinquencies
Credit scores drop at fastest pace since the Great Recession
https://www.cnn.com/2025/09/16/economy/debt-credit-score-student-loans
Americans Are Drowning In Automotive Debt, And It's Going To Get Worse
https://carbuzz.com/americans-automotive-debt/
Poorer Americans hit hardest as tariffs fuel price rises
https://www.bbc.com/news/articles/cm2ze83x7j0o
Poverty is fueling Trumpism — and there’s a sinister reason why
https://www.salon.com/2025/09/16/poverty-is-fueling-trumpism-and-theres-sinister-reason-why/
Our Coming Plutocracy [by Francis Fukuyama]
https://www.persuasion.community/p/our-coming-plutocracy