Jeremy Strong as Kendall Roy in “Succession”.
Graeme Hunter/Warner Bros. Discovery
The US is edging closer to a dream economic scenario – where inflation falls without a sharp spike in unemployment.
But some of the country’s wealthiest people are already feeling worse off.
The Wall Street Journal coined the term “richsession” to describe an economic slump that hits the rich harder.
The US is edging closer to a dream economic scenario – but some of the country’s wealthiest people probably aren’t feeling too thrilled.
Inflation in the US is cooling toward the Federal Reserve’s 2% target, with unemployment holding steady at 3.6% in the face of the central bank’s aggressive interest-rate hikes.
Forecasters have even started to feel rosier about growth, estimating that the US’s Gross Domestic Product rose 1% last quarter, according to the Philadelphia Fed.
But that doesn’t mean some people aren’t feeling the pain. There is a different kind of economic slump on the horizon – a so-called “richsession“.
Wall Street Journal reporter Justin Lahart coined that term at the start of this year to refer to a downturn that disproportionately impacts some of the country’s wealthiest people.
Lahart wasn’t referring to Elon Musk and Mark Zuckerberg – whose billion-dollar fortunes are ballooning thanks to the AI-fueled stock-market rally – but instead to people whose annual salary puts them in the top 25% of US wage earners. Members of that group make over $90,000-a-year, per the Bureau of Labor Statistics.
Layoffs hit that group particularly hard in the first half of 2023, with high-paying firms ranging from Meta Platforms to Goldman Sachs slashing jobs in an effort to cut costs.
Wage growth for the bottom 25% has also outpaced the top quartile over the past 12 months, per the Atlanta Fed, while a major slowdown in spending on luxury brands is another sign that the ultra-rich are starting to fret about an economic slump.
For some, the “richsession” will be a cause for celebration, a potential leveller in a country where inequality outpaces other rich nations, and wealth is disproportionately concentrated in the hands of the top 1%.
For others, it’s merely a reminder that the economy is slowing down – but not necessarily in the way that we’ve come to expect.