Please disable your Ad Blocker to better interact with this website.


Inflation In Action: The ‘Bidenomics’ Myth That Americans Keep On Spending Money

Written by:

Published on: March 28, 2024

One of the big arguments that the media makes is that the economy must be good because consumer spending keeps roaring along. Even though in poll after poll, Americans talk about how the economy is good, the media and its experts act like people don’t really believe it because… they keep spending money.

There are two factors at work here.

One is that everything tends to cost more so spending keeps rising. That’s inflation in action. When food prices are up 30%, spending will rise because people need to eat. The other side of the coin is that we have two economies. And some people are doing quite well while a lot of others are not.

Call it the two-speed economy. Rich Americans are spending at healthy rates, driving overall demand — but there are early signs that low- and middle-income consumers are starting to cut back.

But Bank of America Institute recently analyzed card spending and found that after “being a point of strength during 2023, it appears that lower- and middle-income households’ spending growth has been softening,” though it remains in positive territory year over year.

Meanwhile, as recently as this past June, University of Michigan survey data showed similar levels of consumer sentiment between bottom-third earners and top-level earners. But the gap between them has widened sharply since then, with top earners much more positive about conditions in recent months.

And delinquencies on credit card debts and auto loans have ticked up in recent months to the highest levels in more than a decade.

As a result, companies are increasingly focusing on consumers with disposable income even for those associated with middle or lower-income tier products.

“What has been important is to understand there’s a section of the population that has come under pressure from disposable income,” Coca-Cola CEO James Quincey said on the company’s earnings call last month.

“On the other hand, there’s a segment of consumers that still has plenty of money, plenty of purchasing power and we’ve seen strong growth for some of the higher price point” products, Quincey added.

Fast-food giant McDonald’s noted a similar phenomenon.

“[W]here you see the pressure with the U.S. consumer is that low-income consumer, so call it $45,000 and under. That consumer is pressured,” CEO Christopher Kempczinski told investors last month.

“If you think about middle income, high income, we’re not seeing any real change in behavior with those,” Kempczinski said. “But the battleground is certainly with that low-income consumer.”

In a bad economy, you don’t chase struggling customers, you hike prices and upsell your products. Consumer spending goes up because the segment that can afford your products and services keeps buying, while the segment that can’t will either struggle to occasionally splurge or aren’t profitable enough to be worth the trouble anyway.

That’s the glory of Bidenomics. It’s a Potemkin Village that looks good when you pick and choose statistical measures with no context and no ‘tree-level’ insight.

Article posted with permission from Daniel Greenfield

Become an insider!

Sign up to get breaking alerts from Sons of Liberty Media.

Don't forget to like on Facebook and Twitter.
The opinions expressed in each article are the opinions of the author alone and do not necessarily reflect those of

Trending on The Sons of Liberty Media