Baffled by the voters who shunned Bidenomics and complained about the economy, Democratic Party pundits are convinced that voters are simply ignorant of the facts.
Today, perhaps more than ever, the failure to recognize social-class divisions produces ill-informed, arrogant judgments like those prominent within Democratic Party circles. While aggregate numbers may tell one story, they fail to tell the story of the economic well-being of the classes and strata that make up the aggregate, even the by-far-largest segment of that aggregate. Could it be that Biden’s economic victory was a victory for the wealthiest, the most generously compensated among the US population, while leaving the majority of US citizens (and voters) in the rear-view mirror?
The answer is an unequivocal ‘yes.’
And the answer comes, not from a left-leaning think tank, but from Federal Reserve data by way of Moody’s Analytics and summarized in The Wall Street Journal.
As reported in the WSJ, the top 10% of “earners” -- those households reporting $250,000 in income or more-- are responsible for 49.7% of consumer spending. In other words, nearly half of all consumer spending is accounted for by those in the top 10% of all those reporting their incomes. This is the largest share for this elite segment since the Federal Reserve began tracking in 1989. In just three decades, the top 10%'s portion has increased from over a third to nearly half of all consumer spending.
According to the WSJ:
Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn’t. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more…
Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period.Democratic Party consultant James Carville likes to say “it's the economy, stupid!” that decides US elections. If he is right, the celebration of Bidenomics was widely off the mark. During the Biden years, for 80% of US voters, their economy was stagnant, at best. In that light, the election results are far more understandable as reflective of pocketbook issues.
US economic growth is often portrayed by the major media as driven by household consumption (around two-thirds of gross US economic activity comes from household consumption). However, these reports are deceptive if they fail to acknowledge that nearly all of the consumption growth impacting GDP growth comes from the wealthiest 10% of the population. Arguably, so-called luxury spending is the driving force behind economic growth in the US in our time.
Thus, the widely heralded mantra of capitalist apologists that “a rising tide lifts all boats” has it backwards. In fact, the privileged 10% of all boats that rise constitute the tide.
Economy 101 preaches that working people spend nearly all that they make (or need to borrow more to make ends meet). That same conventional wisdom tells us that the rich reinvest or save most of their earnings. Both may be and are true, though inequality of income has grown so much that the richest 10% can save and reinvest while spending lavishly and conspicuously.
Since late 2021, the excess savings of the bottom 90% has dropped from about $1.1 trillion dollars to $300 billion at the end of 2024. In roughly the same period, the uppermost 10% has maintained an excess savings of about $1.3-1.4 trillion, according to Moody’s Analytics. Clearly, the bottom 90% was forced to draw down savings over the last four years in order to get by. It is important to notice that the concept of the “bottom 90%” masks the reality that each successive lower decile of household income below the top 10% has fewer means and lesser savings to meet a reasonably adequate standard of living. In short, the pain induced by a system maintaining such vast income inequality grows more acute as the level of income declines.
While not a proper class analysis of US society (not to be expected from official government statistics), the Federal Reserve data, as interpreted by Moody’s Analytics, provides a material basis for understanding the most recent US election.[i] As opposed to dire conclusions of a fascist mentality sweeping the country or wild celebrations of the revival of a mythical conservative past, the economic unraveling of the last period fed the electorate's profound thirst for change, any change.
In the wake of a deep economic collapse in the first decade of a new century-- a crisis unlike any seen for generations-- US voters turned, at that time, to a fresh-faced Democrat promising change. He won voters with his earnest, unbounded hope. He produced little change, but more of the same blindness to inequality.
Now, in the wake of the economic stagnation and hardship for the majority 90% struggling through the Biden years, another snake oil salesman returns, capturing one of the two decadent parties with another message of change-- Make America Great Again.
And again, voters act out of desperation.
Don’t blame the voters, blame the bankrupt two-party system and the economic system dominated by and for the rich and powerful.
Greg Godels
zzsblogml@gmail.com
[1] A proper economic class analysis will not evoke income or wealth-- simply contingent, quantified signifiers of inequality-- but qualitative indicators of socio-economic position or status. For Marxists, class is defined by an agent's function within a particular mode of production with regard to the economic relation of exploitation. Thus, under capitalism, class is a division between exploiters-- capitalists-- and the exploited-- workers. One class commands the means of production, the other class sells the former its labor power.
Of course, there are strata within and outside of the two classes: the haute and petit bourgeoisie, the ‘labor aristocracy,’ industrial workers, lumpen-proletariat, etc.
In general, income and wealth inequality are a result of class division and exploitation under capitalism and not its cause.
