"'Now that the top 10% of earners account for 50% of consumption, do nonfarm payrolls matter less than they used to? If stocks keep rising, boosting high-end households' wealth and confidence, can they spend enough to carry the economy through a soft patch in the labor market?' Our answer is a carefully considered 'no,' they said."
"The top 20% of earners in the US have accounted for around 37%-39% of all spending over the last forty years, per BCA's calculations based on Labor Department data."
"BCA thinks job gains in the economy are now approaching "stall speed," a level that suggests a slowdown in job creation could lead to a broader economic slowdown."
High-earning households have supported consumer demand but cannot be relied upon to carry the economy through a slowdown. The top income groups' share of income does not translate directly into an equivalent share of spending; the top 20% account for roughly 37%-39% of spending historically. Job gains are slowing and appear to be approaching "stall speed," which increases the risk that weaker hiring will broaden into an economic slowdown. Stock-market driven wealth gains and concentrated income may not translate into sufficient additional consumption, leaving a dependence on wealthy households risky for sustaining growth.
Read at Business Insider
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