That's why half the country feels like our leaders have abandoned us - and why President Trump won the election

 

The Wall Street Journal pointed out earlier this week that "The U.S. Economy Depends More Than Ever on Rich People".

[Rich] consumers now account for 49.7% of all spending, a record in data going back to 1989, according to an analysis by Moody’s Analytics. Three decades ago, they accounted for about 36%.

All this means that economic growth is unusually reliant on rich Americans continuing to shell out. Mark Zandi, chief economist at Moody’s Analytics, estimated that spending by the top 10% alone accounted for almost one-third of gross domestic product.

Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period.

. . .

Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn’t. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more.

There's more at the link.

That sharp divide in the economy shows up in many ways, not least in our politics.  I daresay most conservative Americans are in the "bottom half" of the country, economically speaking - with shining exceptions like Elon Musk, of course.  If you look at most of the progressive left, they live in larger cities with larger incomes, and react to the nation and the world from within that "economic cocoon" that shelters them from the harsher reality many of us face.  I daresay the readers of this blog average rather less than six-figure incomes every year.

I've lived from hand to mouth, from paycheck to paycheck.  When you're worrying about where the baby's next meal will come from, or juggling rent and a car payment, or having to give up holiday plans because you simply can't afford them any more . . . it gives you a radically different perspective on the economy and on our nation than those who can blithely wave a credit card and do as they please.

The news that the Biden administration was paying illegal migrants far more per month than Social Security recipients added more fuel to the fire of resentment and outrage;  and that boiled over when we learn that disaster victims in North Carolina were being abandoned to their own resources by FEMA because all of the money allocated for that purpose had been redirected to assist illegal migrants.  To make matters even worse, most of that money came from borrowing rather than income, leaving us with the biggest national debt in the nation's history - one our children's children will probably still be struggling to repay.  You may be sure that outrage was a major contributing factor to President Trump's electoral victory last year.

The most worrying thing is that our political elites largely appear to ignore this reality.  Just look at the budget debates going on in the Republican Party right now.  So few of our politicians need to exercise care in managing their money that they ignore the perspective of those of us who do.  There's a breakdown in understanding, in perception.  The politicians seemingly can't resist spending money we don't have.  I'd like nothing more than a balanced budget law (or even better, a Constitutional amendment), specifying that our national budget must balance income and expenditure before it can be passed, and that any loans required to balance it may be no greater than a (very small) percentage or proportion of the total budget, and must be paid off in full before new loans can be authorized.  Obviously, national emergencies (disasters, wars, etc.) might be grounds to suspend the balanced budget requirement for a period, but this should be limited as far as possible.

What say you, friends?

Peter