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December 15, 2020

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🎙“You've got to get to the stage in life where going for it is more important than winning or losing."

1 big thing: The inequality is getting harder to ignore

Illustration of a calculator with a flatlining EKG monitor.

Illustration: Sarah Grillo/Axios

As the frenzy in IPOs and the overall stock market continues, data show overall consumer confidence is languishing and concern about income inequality is rising.

Driving the news: A new survey from research and data firm CivicScience provided exclusively to Axios shows 78% of Americans are at least somewhat concerned about the rising level of inequality in the U.S. and 48% are very concerned.

Why it matters: Economists and social scientists worry about income inequality because it tends to be followed by societal and geopolitical upheaval.

What we're hearing: "Typically rising markets are accompanied by societal trends that mirror rising confidence," Peter Atwater, an economics lecturer at William & Mary, tells me on Twitter.

  • "People should be more generous and peaceful. Unity and agreement should rise and politics should moderate and become more centrist."

That's not what's happening now. Public opinion in the U.S. is as divided as it's been in modern history and people are literally stabbing one another in the streets at political rallies.

The big picture: "People worry about the markets decoupling from the economy. Me, I am much more worried about how decoupled the markets have become from society," Atwater adds.

Watch this space: The Conference Board's latest surveys of CEOs' and consumers' confidence show a yawning divide.

  • CEOs in Q3 were the most confident they have been since early 2018, with confidence levels 48% higher than at the beginning of 2019.
  • Conversely, the Conference Board's commensurate readings on consumer confidence are near their lowest in four years and 16% lower than in January 2019.

Between the lines: Confidence within consumers is also telling the story of inequality. Data provider Morning Consult's daily consumer confidence index showed those earning more than $100,000 a year saw confidence levels increase last week to the highest in a month.

  • Those earning 50,000-$100,000 saw their confidence levels fall by nearly twice as much to the lowest in a month.

The bottom line: "The recent divergence across the income spectrum reflects drastically different realities," Morning Consult economist John Leer said in a release, "in terms of the personal financial conditions of these two groups heading into the winter months as the spread of the virus drives additional restrictions on economic activities."

Bonus chart: Even big business CEOs are worried about inequality

Data: CivicScience; Chart: Axios Visuals
Data: CivicScience; Chart: Axios Visuals

While CEOs of large companies are doing well, they too are worried about rising inequality and the K-shaped recovery, U.S. Chamber of Commerce president Suzanne Clark says.

What we're hearing: "I’ve had a lot of CEOs tell me they’re actually worried about it because of the impact on the economy and the impact on their business," she tells Axios.

  • "They just talk about the economic ecosystem and that you can’t survive on the top of the K with the bottom of the K the way that it is. It’s not sustainable. They talk about it as a real business and economic issue."

By the numbers: The Chamber's latest survey of U.S. small businesses found that 62% fear the worst is still to come with COVID-19’s economic impact and 74% say they need further government assistance.

  • Half of small businesses surveyed say their operations can continue for a year or less in the current business climate before having to permanently close.

Where it stands: "Nearly 100,000 small businesses have already closed permanently due to COVID-19," the Business Roundtable said in a statement Monday night calling for Congress "to take urgent action to protect small businesses" with new spending.

  • "Those that remain, along with millions of families and individuals, are struggling to stay afloat."

The bottom line: "If you’re a big business and you need those customers or you need that supply chain you’re really worried about what’s happening to small business," Clark says.

  • "I’ve heard that a lot — from almost every industry. "

2. Catch up quick

The share of Americans who say they'll get the COVID-19 vaccine as soon as it's available has doubled since September. (Axios)

JPMorgan Chase wrongly charged 170,000 customers overdraft fees, but regulators quietly rebuked the bank rather than pushing for fines and public penalties. (ProPublica)

OPEC reduced projections for global fuel consumption in the first quarter by 1 million barrels per day, noting that uncertainties remain high given the ongoing pandemic and rollout of vaccines. (Bloomberg)

3. Trust in the Fed jumps ahead of December meeting

Data: Axios/Ipsos poll; Chart: Axios Visuals
Data: Axios/Ipsos poll; Chart: Axios Visuals

Americans' trust in the Federal Reserve increased significantly this month in the latest Axios/Ipsos poll, rising for the second straight month and by the most since questions about the central bank were added to the survey in May.

By the numbers: Trust jumped by 7 percentage points, with 42% of respondents saying they had at least a fair amount of trust in the Fed.

  • The percentage of people who say they trust the Fed a fair amount rose 7 percentage points from November's survey while the percentage who say they trust the fed a great deal was unchanged.
  • The percentage who say they have no trust at all in the Fed declined to the lowest it has been since May.
  • Still, at 18%, the percentage of respondents who say they have no trust at all remains more than three times greater than the percentage who say they have a great deal of trust in the Fed (5%).

From the source: "I think the biggest factor is the election isn’t ongoing and Trump and Fox News are not complaining about the Fed anymore," Chris Jackson, SVP of public affairs at Ipsos, tells Axios. "Without attacks, it is reverting back to a more neutral/positive position."

The big picture: Trust in the Fed remains negative and well below where it was in May when 47% of those polled said they had at least a fair amount of trust and 51% said they had not very much or no trust at all.

4. Homeowners realized $1 trillion of equity in Q3

Data: CoreLogic; Chart: Axios Visuals
Data: CoreLogic; Chart: Axios Visuals

U.S. homeowners with mortgages saw a collective equity gain of $1 trillion in the third quarter, a 10.8% increase from Q3 2019, according to a new report from CoreLogic.

  • That comes out to an average gain of $17,000 per homeowner, the largest average equity gain since the first quarter of 2014.

The big picture: The housing market has been on fire since the summer as Americans fled large population centers, looked to take advantage of record-low interest rates and sought to park their cash in real estate as U.S. money supply surged.

Yes, but: Experts believe the overall boom in home sales could continue for years, however, the CoreLogic HPI Forecast shows home price growth slowing over the next 12 months as new home construction and more existing homes ease supply pressures.

  • This could moderate the pace of both price growth and equity gains, the company says.

Of note: The percentage of homeowners who hold negative equity, or owe more on their mortgage than their homes are currently worth, decreased by 6.9% from Q2 to 1.6 million homes, or 3% of all mortgaged properties.

5. Larry Ellison tells employees he'll be working from his island

A screenshot of a tweet by Ramp Capital showing a photo of Oracle CEO Larry Ellison's email to staff.
A screenshot of a tweet by Ramp Capital showing a photo of Oracle CEO Larry Ellison's email to staff.

Oracle co-founder Larry Ellison told employees that he has moved to Lanai, Hawaii, becoming the latest Silicon Valley executive to announce a departure from California.

  • Oracle announced Friday that it had shifted the company’s headquarters to Austin, from Redwood City, California, and Ellison made clear on Monday that he would not be making the trip to Texas.

Of note: Ellison owns the island of Lanai.

  • Lanai is 140.5 square miles and has a population of slightly more than 3,000 people.
  • Ellison owns 98% of it.

Thanks for reading!

Quote: “You've got to get to the stage in life where going for it is more important than winning or losing."

Why it matters: On Dec. 15, 1992, tennis great Arthur Ashe was named Sports Illustrated's Sportsperson of the Year. During that year, Ashe publicly announced he had been diagnosed with HIV/AIDS and began working to educate others about the virus. He founded the Arthur Ashe Foundation for the Defeat of AIDS and the Arthur Ashe Institute for Urban Health before his death in 1993.

  • Ashe was posthumously awarded the Presidential Medal of Freedom by President Clinton.