Heavy Lifting

If only America's poor and middle class would stop being so goddamned cheap instead of leaving the "heavy lifting" to the rich, maybe this economy would start to pick up a little.

Sales of luxury goods are soaring, while sales at Wal-Mart are tepid. The affluent cardholders of American Express have rebounded, while Visa and MasterCard have yet to see the same surge. Mansions are selling again, ranch houses are not.

The reasons for the divergence are simple enough: The rich are benefiting from soaring stock markets, cheap money and rapid growth overseas. The rest of America is still weighed down by unemployment, poor credit, falling real-estate values and slow domestic growth.

Economists call this a plutonomy, or an economy dominated by the rich. “The heavy lifting is being done by the upper-income households,” Michael Feroli, chief U.S. economist at J.P. Morgan Chase & Co. told Bloomberg.

[...]

Mr. Zandi [of Moody's Analytics] and others say this imbalance is inherently unstable. Relying on such a tiny slice of consumers, who are themselves highly reliant on volatile stock markets and asset prices, is no recipe for long-term growth.

“In the near term it highlights the fragility of the recovery,” he said.

[...]

It’s comforting to think of the plutonomy as temporary, as an unstable, top-heavy system that will soon crumble under its own weight. But right now, all signs point more to its permanence than its collapse.

[WSJ] via [The Awl]