According to the NYT,
Wall Street has finally started to notice the big, obvious problem with rampant inequality: As the middle class dies, businesses which cater to the middle class also start to die.
Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts.
Heh. That's because business "experts" are paid to tell the one percenters what they want to hear.
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.
Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
This will hit Hollywood eventually. Middle class people go to the movies; poor people download torrents.
While spending among the most affluent consumers has managed to propel the economy forward, the sharpening divide is worrying, Mr. Fazzari said.
“It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind,” he said. “We might be able to muddle along — but can we really recover?”
No. No you cannot. Soon, even the muddling along will end. As Charles Pierce
notes (in response to the above story):
Suddenly, lo and behold, the blog's First Law Of Economics -- Fk The Deficit. People Got No Jobs. People Got No Money -- kicks in and, unless, you're selling yachts, business goes sour because...wait for it...nobody can afford to buy anything! Hoocodanode?
This may be the first country to die of the incredibly obvious.
Pierce has skin in this game. He writes for Esquire, the magazine that tells middle class men what tie to buy.
Atrios (reading Pierce reading the NYT) adds this
It reminds me a bit of the housing bubble, when I knew there was a housing bubble not because I was a supergenius, but because I know there was no possible way that many people had high enough incomes to pay for those mortgages in places like Southern California. If people aren't making any money, and what money they make is being skimmed off by various malevolent businesses, they don't have any money to buy stuff. It isn't complicated.
I lived in Southern California at the time. As early as 2003, I sensed that there was no longevity in a system which sent housing prices racing while incomes crawled.
This experience allowed ground-level guys like me to predict things that eluded the Wall Street supergeniuses. The ability to say "I told you so" provides some comfort, although I'd much prefer to have a country that worked the way it used to.
Unfortunately, that can't happen. We inhabit a culture that damns you as a Marxist if you tell it like it is.