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  • Writer's pictureEdward Ballsdon

USA: “Have” vs “Have Not”

This note analyses the income/expenditure and asset/liability data for households to highlight US inequalities:

 

  • There is a very significant difference between the net worth of renters (34% of the population) and homeowners, with the Median [Mean] renter family having 3% [10%] of the net worth of the Median [Mean] homeowner.

  • The multiples between the Mean and Median average asset values are very significant, highlighting that asset ownership is skewed towards the very wealthy.

  • The multiples between the Mean and Median average debt amounts are small, suggesting that outstanding debt amounts are more evenly distributed

  • Income and expenditure data shows that a large part of overall PCE will be impacted by tighter monetary policy, which could explain the low consumer confidence.

  • A significant number of corporates are unprofitable, whilst 2023 profitability growth was limited to very few companies. Small business sector optimism is at pretty depressed levels.

  • Corporate inequality might explain the deleveraging trend in place.

 

Inequalities are probably responsible for the ever-increasing bifurcation of political views and support a view that real interest rates are too high for future growth generation given the current leverage and deleveraging trends. The corporate inequalities are leading to different equity performance, with the risk of asset bubbles and a lack of equity finance availability to the strugglers.


This all suggests an unstable macro environment, which leaves the banking and asset managers, who have set aside low provisions and reserves, very much at risk.

 

 


 

 

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