00:00 Speaker A
Mark, um, I want to turn to the research that you at Moody’s did on the so-called K-shaped economy. Um, and in your latest analysis, 59% of all consumer spending comes from the top 20% of income earners. Um, listen, you’ve been doing this for a long time. I’ve been doing this for a long time.
00:26 Speaker A
Something about right now feels different in that way in the United States. And I’m just wondering sort of how you’re thinking about it more broadly, because normally this happens, the market’s doing okay,
00:43 Speaker A
the economy GDP is okay even if folks at the bottom are not doing great. Is that different this time or does it feel different than in past eras to you?
00:56 Speaker B
Yeah, you know, isn’t that an amazing statistic though, Julie? I mean, the 20 the top 20% of the income distribution is count counts for 60% of the spending. That’s just uh, you know, and and it gets even more crazy when you go further up the distribution, you know, the top 10%, the top 1%, the top 1/10th of 1%. I mean, very concentrated.
01:23 Speaker B
And it’s become increasingly so. And, you know, I don’t know that that that’s a a a cliff event for the economy. I don’t think that, but it’s a definitely corrosive and it’s certainly a vulnerability, right? I mean, if we’re economy is so dependent on the well- to-do. And the well- to-do are obviously so dependent on the stock market and the stock market is obviously very dependent on those AI stocks.
01:47 Speaker B
I don’t know. That doesn’t feel like a, you know, a really great place. That that goes to my my point about fragility. That feels fragile to me. That doesn’t feel anything other than
01:58 Speaker B
that you know, that’s a potential threat. The other thing is that this makes it feel a little different. I do worry about AI in this context. I mean, it does, you know, past technologies, remember I we talked about how the benefits of that diffused out throughout the economy benefited everybody pretty quickly. This does this feels like it might not be. It feels more concentrated. The companies that are dominating, they’re hyperscalers, they’re huge, they’re massive, they need scale economies, and their shareholders are benefiting enormously. Are we going to see the benefits of this diffuse more broadly? And if we don’t,
02:37 Speaker B
then then the income and wealth distribution, the spending distribution is going to become more skewed. And and I, you know, I think that has all kinds of things we need to worry about longer run. What does it mean for our our politics, our fractured politics? Can we come to a consensus on anything if we’ve got all these different very widely different perspectives and performances across the income and wealth distribution. What does it mean for society, our societal ills, everything from, you know, drug abuse to to homelessness and everything else. So,
03:10 Speaker B
I I do worry about this and I do think it’s an issue. I I don’t think it’s a near-term threat, but I think it’s a a longer-term problem that we we’re going to have to grapple with.