Retiring Baby Boomers & The G-Shaped Economy

Many economists continue to question the resilience of consumer spending in the US. The naysayers don't believe it's sustainable and continue to expect significant consumer retrenchment. They claim that the economy is "K-shaped," with the wealthiest 10% of households accounting for 50% of all retail spending. Those widely quoted numbers are from Moody's Chief Economist Mark Zandi. They make no sense to us.

We don't doubt that the growth of high-income households' spending has been faster than that of low- and middle-income households over the past couple of years. The former has certainly been boosted by a very positive wealth effect from the stock market. The latter undoubtedly slowed over the past couple of years once consumers spent all the government-provided pandemic support checks. But there is no way that 10% of households account for 50% of consumer spending. Just go to Costco or your local mall to see what we mean.