> Apple’s latest financial results give us a glimpse into this phenomenon. After a couple years of lagging sales, the release of the iPhone 17 led to double-digit growth in iPhone sales in the last quarter. The retail price of that new phone: $799 dollars.
> This concentration of spending at the top has been building for decades, driven by widening wealth inequality, said Kristina Sargent, an economist at Middlebury College.
> “Higher earners have seen strong wage growth and massive gains in wealth from stock and housing. Meanwhile, middle- and lower-income households are squeezed by rising costs like rent and childcare, groceries, the basics,” she said.
> This inequality has really shown up in spending the last few years, as consumers have grappled with inflation.
This is going to be a major problem because rich people don’t buy 10 million iPhones but 10 million middle class people do IF they have the money.
trade_thriving on
I’ve been seeing this play out in real time with my portfolio tbh. The companies I hold that cater to higher income brackets have been crushing it while everything else is just meh. Like I’m watching luxury retail stocks do great while discount chains struggle. Makes sense when you think about it – if you’re making 6 figures your still spending on vacations and nice dinners, but if your paycheck to paycheck you’re cutting back on everything. The scary part is how dependent we’ve become on that top tier spending. I mean what happens when those high earners finally start pulling back? Feels pretty fragile to me.
BidenGlazer on
This entire article is basically just wrong.
> A slim slice of consumers in the top quintile of incomes is doing the majority of spending in this economy.
> “Higher earners have seen strong wage growth and massive gains in wealth from stock and housing. Meanwhile, middle- and lower-income households are squeezed by rising costs like rent and childcare, groceries, the basics,” she said.
> This inequality has really shown up in spending the last few years, as consumers have grappled with inflation.
Wages for every income decile have outpaced inflation.
ProfessionalOil2014 on
Man, if only there was some kind of similar period in history of a serious economic depression caused by a booming stock market helping the rich and a series of economic failures seriously hurting the poor over and over again until an eventual collapse? If only there was also an analog of a do nothing corrupt conservative president in charge that actively campaigned on the government doing nothing but helping big business and then being sidelined by a massive depression? If only there was a precedent for tariffs making this economic depression worse and lengthening it by years?
I can’t quite put my finger on it, but I feel like this happened once before and the culprits, actions they took, and slogans were almost all the same last time.
/s
Capital_Historian685 on
Yes, but the K-shaped economy is global, with many countries seeing millions of people moving up into at least middle class. Apple, for example, is expected to sell over 15 million iPhones in India alone for 2025.
Long story short: there are a LOT of high-income spenders in the world. And there does seem to be plenty of room for growth. Despite all the tariff turmoil, we live in an era of global trade, which means people need to think globally.
SlotherineRex on
Discretionary spending increases with income.
The economy is becoming more and more dependent on high income consumers.
If high income consumers decide not to spend their discretionary income for fear of recession, job loss, or any number of reasons, the economy falls harder and faster than it has in the past.
8 Comments
> Apple’s latest financial results give us a glimpse into this phenomenon. After a couple years of lagging sales, the release of the iPhone 17 led to double-digit growth in iPhone sales in the last quarter. The retail price of that new phone: $799 dollars.
> This concentration of spending at the top has been building for decades, driven by widening wealth inequality, said Kristina Sargent, an economist at Middlebury College.
> “Higher earners have seen strong wage growth and massive gains in wealth from stock and housing. Meanwhile, middle- and lower-income households are squeezed by rising costs like rent and childcare, groceries, the basics,” she said.
> This inequality has really shown up in spending the last few years, as consumers have grappled with inflation.
Yes? That’s the definition of k shape economy….?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Yes? That’s the definition of k shape economy….?
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
Yes? That’s the definition of k shape economy….?
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
This is going to be a major problem because rich people don’t buy 10 million iPhones but 10 million middle class people do IF they have the money.
I’ve been seeing this play out in real time with my portfolio tbh. The companies I hold that cater to higher income brackets have been crushing it while everything else is just meh. Like I’m watching luxury retail stocks do great while discount chains struggle. Makes sense when you think about it – if you’re making 6 figures your still spending on vacations and nice dinners, but if your paycheck to paycheck you’re cutting back on everything. The scary part is how dependent we’ve become on that top tier spending. I mean what happens when those high earners finally start pulling back? Feels pretty fragile to me.
This entire article is basically just wrong.
> A slim slice of consumers in the top quintile of incomes is doing the majority of spending in this economy.
No they are not. The top quintile accounts for [40% of spending](https://www.bls.gov/cex/a-distributional-approach-to-us-personal-consumption-expenditures-overview.pdf)
> “Higher earners have seen strong wage growth and massive gains in wealth from stock and housing. Meanwhile, middle- and lower-income households are squeezed by rising costs like rent and childcare, groceries, the basics,” she said.
No they have not. The poorest among us were the ones that saw the [strongest wage growth](https://www.epi.org/publication/strong-wage-growth-for-low-wage-workers-bucks-the-historic-trend/) since COVID.
> This inequality has really shown up in spending the last few years, as consumers have grappled with inflation.
Wages for every income decile have outpaced inflation.
Man, if only there was some kind of similar period in history of a serious economic depression caused by a booming stock market helping the rich and a series of economic failures seriously hurting the poor over and over again until an eventual collapse? If only there was also an analog of a do nothing corrupt conservative president in charge that actively campaigned on the government doing nothing but helping big business and then being sidelined by a massive depression? If only there was a precedent for tariffs making this economic depression worse and lengthening it by years?
I can’t quite put my finger on it, but I feel like this happened once before and the culprits, actions they took, and slogans were almost all the same last time.
/s
Yes, but the K-shaped economy is global, with many countries seeing millions of people moving up into at least middle class. Apple, for example, is expected to sell over 15 million iPhones in India alone for 2025.
Long story short: there are a LOT of high-income spenders in the world. And there does seem to be plenty of room for growth. Despite all the tariff turmoil, we live in an era of global trade, which means people need to think globally.
Discretionary spending increases with income.
The economy is becoming more and more dependent on high income consumers.
If high income consumers decide not to spend their discretionary income for fear of recession, job loss, or any number of reasons, the economy falls harder and faster than it has in the past.