Uh oh, rich Americans are bumming
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The mood among the country's highest earners is souring, according to new data.
Why it matters: The U.S. economy depends on rich people spending money, and any decline in sentiment could spell trouble ahead.
By the numbers: Consumer sentiment among those earning $100,000 or more is still in positive territory, but it has fallen about 10 points over the past month, according to Morning Consult's index.
- The research firm measures people's feelings about their own personal finances, business conditions overall and whether a major purchase is a good idea.
Yes, but: Higher earners are way happier than everyone else. For those earning less than $50,000, sentiment's been trending lower since the spring. And those in the middle dipped into negative territory this summer.
Zoom out: What's driving the high-income mood down now is the labor market, says John Leer, Morning Consult's chief economist.
- "The high-income consumer is more vulnerable than they've been since really coming out of the pandemic," he says.
- The August jobs report showed a labor market that's largely slowing down — on top of an ongoing "white-collar recession" that's been driving job anxiety all year.
The big picture: Spending among high earners is buoying the entire economy — the top 10% of earners accounted for nearly half of all spending in the three months that ended in August, according to an analysis from Moody's Analytics.
- And spending overall has remained firm, as Tuesday's retail sales data for August showed.
Between the lines: "The U.S. economy is being largely powered by the well-to-do," Moody's chief economist Mark Zandi posted on Tuesday.
- "As long as they keep spending, the economy should avoid recession, but if they turn more cautious, for whatever reason, the economy has a big problem."
Flashback: Consumer vibes have been off for years — just take a look at the chart above. But the highest earners were the only group whose mood even approached pre-pandemic levels — thanks in no small part to a soaring stock market.
- That has widened the sentiment gap between rich and poor.
What to watch: Economists believe that the full impact of higher tariffs is going to start pinching more as we approach the end of the year.
- Pair that with the weak labor market, Leer says, and "the most likely outcome is that you're going to see the high income consumer start to feel worse about their personal finances."
