Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for your money. We’re joined by James Nelson, financial planner at NelsonCorp Wealth Management. Welcome back, James.
James Nelson:
Thank you, Brandi.
Brandy Auterson-Hurst:
So consumer spending has been strong lately. What are you seeing in the data?
James Nelson:
Yeah. Consumer spending is always important to watch because it makes up about two-thirds of the US economy. What stands out to us right now is how much of that spending is coming from the top 10% earners. And we’ve got a chart here that illustrates this. And what the data shows is that almost half of all US consumer spending is coming from the top 10% of earners. That’s the highest we have seen since 1989. Now, if you look at the chart, back in the early ’90s, the top 10% of earners only made up about one-third. So we went from one-third to two-thirds, and that’s a pretty big margin. This means that the US economy leans heavily on the higher income households to keep spending and to keep things going.
Brandy Auterson-Hurst:
Okay. What would you say is the main takeaway for viewers?
James Nelson:
Well, spending is much more concentrated at the top now, which creates different risks for the economy. A lot of the spending power tends to lead to the higher earners, and they have that by stock exposure, higher risk assets like real estate and housing. So if those asset classes take a hit, that could ripple through to the economy because when wealth falls, typically spending also falls, and that puts a lot of pressure on those asset classes. So we’re not sounding the alarm, but it is pointing out a lot of the risk that we look at for our clients.
Brandy Auterson-Hurst:
All right, James, as always, thanks for joining us.
James Nelson:
Thank you, Brandy.
Brandy Auterson-Hurst:
If you missed any of our discussion, we’ll make it available for you on OurQuadCities.com.
Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.