As usual Greenspan comes up with a bogus theory (*) about this, that misses the core. The real cause is more basic, easy money and accompanying inflation mostly benefits "early recipients" (Bully), and penalizies late or non recievers who then get to eat inflation fumes. Economists also tend to overly focus on one aspect of inflation, gasoline (**). That's just another form of the "my dog ate the homework" school of "economics". It's like a doctor who spends all his time doing tongue examinations for diagnosing serious illness.
Holiday Haul Goes to High-End Retailers (edited excerpts from Washington Post article):
washingtonpost.com
Sales "are robust" this year at EuroMotorcars in Bethesda, which sells Mercedes-Benz, Bentley and Rolls-Royce vehicles, said Gil Hofheimer, who manages the Bentley and Rolls division.
One popular seller this season is the new Bentley Continental GT, which goes for around $165,000, he said. Bentley sales alone are up more than 700 percent, he said; the company will sell more than 100 of the vehicles this year, compared with 12 last year.
Sales are up 27 percent so far this year at the Tiny Jewel Box, a family-owned jewelry store that specializes in vintage items, said chief executive Jim Rosenheim. That compares with a 16 percent increase in sales last year.
Annapolis Yacht Sales President Garth Hichens said sales are "well up over last year." The company sells about 140 sailboats a year, ranging in price from about $30,000 for the small and used to around $500,000 for the big and new.
Pay is rising more than twice as fast for the top fifth of wage earners as it is for all others, and the pace of gains at the high end is quickening, according to economists' analyses of government income data through September.
Meanwhile, the top 20 percent of households, ranked by income from all sources and earning $127,000 or more as of 2003, accounts for more than 40 percent of all consumer spending, according to Labor Department figures.
The average household income of a Wal-Mart shopper is $35,000 a year while a Target shopper's is $50,000 a year. These consumers have been among the hardest-hit by rising fuel and food costs this year, said Niemira, who estimates that Wal-Mart's sales are twice as likely to fall in response to rising gasoline prices (**) as the industry's sales as a whole.
Meanwhile, the average household income of a Neiman Marcus shopper is more than $200,000 a year, the company estimates.
If the highest-paid workers continue to score ever-bigger salaries, bonuses and commissions, in other words, the economy should grow solidly even if the job market for other employees improves only very slowly for a while, according to economists who have studied the data, including some at the Federal Reserve. Fast wage growth at the top, the data indicate, has more than offset weaker gains at the bottom, so that total U.S. consumer purchasing power has risen strongly.
While this may be good news for Neiman Marcus and for overall economic growth, it raises other concerns about the social costs of growing income inequality, according to economists as far apart politically as Republican Fed Chairman Alan Greenspan and Jared Bernstein, senior economist at the Economic Policy Institute, a liberal think tank.
"From the perspective of equity, this is no way to run an expansion," Bernstein said. "We ought to be able to have both growth and equity."
(*) Greenspan has implied as much, though in more complicated language. In frequent public remarks on the subject, he has attributed the growing pay gap to the fact that highly educated and skilled workers are in growing demand in an increasingly information-based economy, while less-educated, lower-skilled workers find plenty of competition for lower-paying work."
Several Fed officials have raised concerns over the past year that the economic recovery could falter again if the payroll job market doesn't strengthen more, and they have used this on occasion as an argument for keeping interest rates relatively low to spur faster economic growth. But some think the expansion will continue if pay gains remain robust for the top 20 percent, because total consumer spending will keep rising at a healthy clip.
The more sanguine viewpoint is "not unreasonable," Stone said. But he remains worried that the job market appears likely to weaken early next year. "I'm not sure we're out of the woods." |
