A family “wealth boom” is the highest on record.
The Democrats/Republican tribes are divided on almost everything, including a simple matter of whether their lives are better these days or worse. It a bit of a surprise (to me) to notice that in the past few months even the Republicans have reluctantly become more optimistic.
Adam Tooze on Substack points out this feature of expressive responding, where people base their answers on political affiliations, and their opinions can diverge from their actual consumer behaviour.
The fact that the Republicans are seeing a better future may have a critical influence on the 2024 elections. Biden only narrowly pulled out a win in 2020 because Trump wasn’t listening to voters when it came to Covid. Polls up till now suggest that consumers trust Trump more than Biden on the economy.
And they had a reason for their dissatisfaction.
While there has been some good news on the growth of GDP, this is not usually transmitted to ‘how people live’. This is where Trump shines.
Trump knows that GDP may look strong, but two-thirds of households live paycheck to paycheck (at least some of the time). These families rely on credit cards to make it through the week. They can’t accumulate enough wealth to ensure financial security. More middle-class households are worried about the economy now than they were a year ago.
The new wealth being generated by a strong economy has not been passed on to most people. Income inequality is worse than ever. The top 5 percent of households received almost one-quarter of household income in 2022 and the top 20 percent got over half. The bottom 40 percent had to be content splitting the remaining 10 percent of the wealth.
There’s some hope, however. These figures have slightly improved in recent years. The percent living paycheck-to-paycheck has actually improved. And more than one-third said their income has risen. Further, it means that every 15h person in the US is a millionaire. (I am located in numbers 1–14).
In this light, the recent wage settlements in the auto industry are a good pointer to better days ahead.