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unidentified
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Sharing deal, which President Trump is seeking from Ukraine. | |
| We plan to show you a few events, including an Oval Office meeting between the two leaders and a joint news conference. | ||
| They'll speak to the press live at 1 p.m. Eastern. | ||
| And later, the Ukrainian president will talk about securing peace three years after the Russian invasion of his country. | ||
| That's hosted by the Hudson Institute at 4. | ||
| You can watch all of these events live on C-SPAN. | ||
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| C-SPAN, Democracy Unfiltered. | ||
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| Let's go beyond. | ||
| Midco supports C-SPAN as a public service, along with these other television providers, giving you a front-row seat to democracy. | ||
| Joining us this morning is Mark Zandy, chief economist for Moody's Analytics, here to talk about the U.S. economy's growing reliance on high-income earners. | ||
| Mark Zandy, talk about your research. | ||
| What did you find? | ||
| What is the headline? | ||
|
unidentified
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Well, Greta, good to be with you. | |
| Thanks for the opportunity. | ||
| Well, the American economy is very dependent on the spending of the well-to-do, the folks in the top part of the income and wealth distribution. | ||
| I mean, just to give you a stat to make that concrete, the folks in the top 10% of the income distribution account for almost 50% of the personal outlays that we do as consumers. | ||
| That gives you a sense of context. | ||
| And it obviously goes to the strength of their finances. | ||
| Got a job, wage growth is strong, but they've been enjoying record stock prices, record housing values. | ||
| They have any debt at all. | ||
| It's a 30-year fixed rate mortgage. | ||
| They locked in when rates were low. | ||
| So they're sitting in a very good financial spot. | ||
| And folks in the bottom part of the income distribution, the less well-to-do, lower-income households, they're struggling. | ||
| Obviously, they don't own stocks. | ||
| They may not own a home. | ||
| They have credit card debt, consumer finance loans that they took on to try to maintain their purchasing power when inflation was raging. | ||
| They have a job. | ||
| That's really important. | ||
| That's key to keeping things moving forward. | ||
| But other than that, they're struggling with their finances. | ||
| So very large differences between the folks at the top part of the distribution and the folks at the bottom part of the distribution. | ||
| More from your report. | ||
| As you said, the top 10% of U.S. earners, that's people who make $250,000 plus in their households, count for 49.7% of all spending, a record going back to 1989. | ||
| This accounts for about, this was accounted for about 36% three decades ago. | ||
| So that's the change right there. | ||
| Mark Zandy, can you talk about that change? | ||
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unidentified
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Yeah, that's a very significant change over the decades. | |
| And it does go to the ongoing so-called skewing of the income distribution and wealth distribution. | ||
| Very simply, folks that are doing well are doing better and better and better and taking a bigger share of the economic pie. | ||
| Now, that doesn't mean that wages and incomes haven't been rising for everyone else for middle-income households, lower-income households. | ||
| It has. | ||
| It just means that the share of that income, of that wealth, and of that spending has increasingly accrued to the folks at the top part of the distribution. | ||
| You know, Greta, you know, it also, there's a lot of, you know, obvious concerns about equity, but there's also concerns about what this means for the economy in that if the economy is so dependent on such a small group of folks, and that group of folks is so dependent on things like stock prices and housing values. | ||
| It does give you a sense that the economy is somewhat vulnerable here if things don't stick to scripts. | ||
| So when you're looking at the stock market, if it starts to go down, that poses a broader, mortal threat to the broader economy because of the impact that has on the well-to-do and the fact that the well-to-do account for such a large share of what's going on. | ||
| How vulnerable? | ||
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unidentified
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I think it's vulnerable. | |
| I think it's a concern. | ||
| That's been brought into clear relief in the last few days. | ||
| I don't know if you follow the stock market like I do, but a lot of red on the screen over the last few days and a lot of concern about the stock market. | ||
| I mean, the market is very highly valued, richly valued. | ||
| Prices are very high to the underlying corporate earnings that support those prices. | ||
| And even in the stock market, the gains there are very concentrated. | ||
| If you look at the stock, the companies that are driving the stock market, it's the big tech companies, the so-called magnificent seven. | ||
| So not only is spending very dependent on a small group that's dependent on the stock market, but the stock market itself is very dependent on a few companies that are kind of driving the train here. | ||
| So in my mind, that is a key vulnerability to the broader economy. | ||
| Mark Zandi, do you see bubbles in the economy that could pop, that could burst? | ||
|
unidentified
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I don't know. | |
| I go so far as to say it's a bubble. | ||
| A bubble implies speculation that people are just buying simply because the price rose yesterday, therefore it will rise tomorrow. | ||
| Maybe there's some of that creeping in. | ||
| When I see, like, for example, President Trump issued a crypto coin soon after his inauguration, that the value of that jumped significantly. | ||
| It's come back down, but it's still worth, last I look, three, four billion dollars. | ||
| I mean, and there's just no value there. | ||
| There's just nothing. | ||
| So that gives you a sense that things are what I'd call frothy, speculative, maybe bubble-like. | ||
| I don't want to extrapolate that too far because if you go into the stock market, back into the stock market again, those companies I just mentioned, the tech companies that are driving the gains, they're real companies. | ||
| They're joggernauts. | ||
| They add real value. | ||
| They're very profitable, highly profitable. | ||
| The prospects are very good. | ||
| So that's not consistent with the idea the market is in a bubble. | ||
| I think it's more likely, you could argue it's just very highly valued, richly valued, overvalued, maybe bordering on frothy, but speculative probably in a bubble is probably too far. | ||
| We're talking with Mark Zandi this morning, chief economist with Moody's Analytics. | ||
| He's here to talk about the U.S. economy and this new report on high income earners. | ||
| Here's how we've divided the lines this morning. | ||
| If you make under $100,000, dial in this morning at $202,748, $8,000. | ||
| If you make between $100,000 and $250,000, your line this morning is $202,748, 8001. | ||
| And if you make over $250,000, that 10%, call us at 202-748-8002. | ||
| We welcome your comments and your questions this morning. | ||
| Mark Zandi, before we get to calls, let's take some headlines this morning from the papers. | ||
| The Wall Street Journal, U.S. vows to raise tariffs on three countries, Mexico, Canada, China. | ||
| The China move slated to take effect Tuesday, along with the Canada and Mexico actions, doubles up on the previous 10% additional tariff Trump placed on China's products this month. |