The US consumer is still spending but increasingly, that consumer is the top 10% At the aggregate level, consumer spending can look resilient and even strong but underneath the surface, the composition of that spending has changed materially. The top 10% of US earners now account for nearly half of total consumer spending, while the share of the bottom 80% has been steadily declining over time.
It matters because US consumption is becoming increasingly dependent on higher-income households which do not behave like the rest of the population. They are less sensitive to petrol prices, less exposed to short-term inflation shocks, less dependent on wage income, and much more supported by asset prices. The apparent resilience of US consumption may simply reflect the fact that the wealthiest households are still spending.
As consumption becomes more concentrated at the top, it becomes more linked to financial markets. If asset prices rise, the wealth effect supports spending, but if equities correct, real estate weakens, or high-income confidence deteriorates, the downside risk to consumption can become much larger than expected.
US consumption remains resilient but is becoming less democratic and more financialised.
*Link: https://ft.com/content/e9ee464f-a43e-4088-aade-053e2c135f5d?syn-25a6b1a6=1…
The US consumer is still spending but increasingly, that consumer is the top 10% 
At the aggregate level, consumer spending can look resilient and even strong but underneath the surface, the composition of that spending has changed materially. The top 10% of US earners now account for nearly half of total consumer spending, while the share of the bottom 80% has been steadily declining over time.
It matters because US consumption is becoming increasingly dependent on higher-income households which do not behave like the rest of the population. They are less sensitive to petrol prices, less exposed to short-term inflation shocks, less dependent on wage income, and much more supported by asset prices. The apparent resilience of US consumption may simply reflect the fact that the wealthiest households are still spending.
As consumption becomes more concentrated at the top, it becomes more linked to financial markets. If asset prices rise, the wealth effect supports spending, but if equities correct, real estate weakens, or high-income confidence deteriorates, the downside risk to consumption can become much larger than expected.
US consumption remains resilient but is becoming less democratic and more financialised.
*Link: ft.com/content/e9ee46