Pirate's Cove

See, it’s not that the policies of Biden and Democrats, such as too much spending and borrowing money, are causing issues. Nope, it’s you older rich Americans

Affluent Americans are driving US economy and likely delaying need for Fed rate cuts

Since retiring two years ago, Joan Harris has upped her travel game.

Once or twice a year, she visits her two adult children in different states. She’s planning multiple other trips, including to a science fiction convention in Scotland and a Disney cruise soon after that, along with a trip next year to neolithic sites in Great Britain.

“I really have more money to spend now than when I was working,” said Harris, 64, an engineer who worked 29 years for the federal government and lives in Albuquerque, New Mexico.

So, taking normal trips is now bad? What about the Democrat Congress critters who are taking a large number of flights to D.C. from their homes each month? This is silly

Older Americans like Harris are fueling a sustained boost to the U.S. economy. Benefiting from outsize gains in the stock and housing markets over the past several years, they are accounting for a larger share of consumer spending — the principal driver of economic growth — than ever before.

And much of their spending is going toward higher-priced services like travel, health care and entertainment, putting further upward pressure on those prices — and on inflation. Such spending is relatively immune to the Federal Reserve’s push to slow growth and tame inflation through higher borrowing rates, because it rarely requires borrowing.

Affluent older Americans, if they own government bonds, may even be benefiting from the Fed’s rate hikes. Those hikes have led to higher bond yields, generating more income for those who own such bonds.

It’s not like they’re going out and buying lots and lots of big ticket items. It’s more like they’re simply the recipients of the Feds policy of higher rates

Wealth is also disproportionately held by older Americans. People ages 55 and over now own nearly three-quarters of all household wealth, up from 68% in 2010, according to the Fed. In percentage terms since the pandemic, household net worth has also surged for younger households. But because younger adults started from a much lower level, their gains haven’t been anywhere near enough to keep pace with older Americans.

Well, yeah, because they worked for it. They weren’t getting worthless degrees which make it hard to get a good paying job. They aren’t putting on too many visible tattoos and face piercings which makes it tough to employ them. And having a poor work attitude. So, the wealth has to go somewhere, and the Millennials and GenZers haven’t put in the work to increase the pie and put it in their pockets

One result of the Fed’s higher rates has been a kind of bifurcated economy, by age. Older, wealthier Americans who already own homes and cars have been much less affected by the Fed’s rate hikes. By contrast, younger Americans are enduring a combination of expensive home prices and high mortgage rates, making it much harder to buy a first home.

Well, yeah. And, so far, has it really helped?

(Daily Caller) The U.S. economy is showing signs of stagflation as growth slumps down and prices continue to surge for average Americans, experts told the Daily Caller News Foundation.

U.S. annual economic growth measured just 1.6% in the first quarter of 2024, following a report of persistently high inflation in March of 3.5% year-over-year. The combination of both low growth and high inflation, in conjunction with continuously high amounts of government spending and debt, has led to signs of stagflation in the U.S. economy, which wreaked havoc on U.S. consumers throughout the 1970’s, according to experts who spoke to the DCNF.

Well, we’ll see. There are lots of reports like this, but, unemployment isn’t spiking, and low growth is not happening quarter after quarter. Anyhow, the media will do anything to avoid blaming Biden and Democrats for their policies and reckless spending.