The top ten benefited from a rise in dividends served by equities

Top ten

But the rise in the profitability of equities is more limited than the valuation of stock markets suggests. Due to the stock market overvaluation desired by the FED, there is a growing disconnect between the real economy and the stock market economy.

The top ten can benefit from a rise in these revenues; impacted for a moment by the crisis, it can also consume them and pull American growing up, but this consumption remains fragile. The consumption of the top ten is strongly stimulated by stock market fictions. It is not enough that the revenues of the top ten have come back under the action of the mechanisms that we have detailed in our introduction. It should also be considered that the stock market overvaluation allows affluent and wealthy households to extract income from the disposal of stock market assets, to spend these incomes or to reinvest them. Finally, we must realize that the growth of stock market values promises future achievements. more juicy capital gains than today and higher consumption capacities.

It has come to this point that the FED policy denounces itself

The consumerist euphoria that derives from income from equities (and more broadly from the various forms of capital ownership) is in fact enveloped by an illusion of enrichment and the promise of a future income that owes everything to the artificial politics of EQ EDF.

The question is, therefore, to determine whether the FED has put on the way to the end of crisis an obstacle that could derail the recovery. A stock market reversal is quite possible, it is already inscribed in the reality of dissociations real economy-stock market economy of which we gave some examples. Such a reversal would have the effect of reducing the consumption of affluent and wealthy households.

The Fed’s policy proves all the more problematic as the FED is emerging from QE operations without breaking with a very low-interest rate policy that will support the stock market price. There is a risk of a reversal in the consumption of the top ten if tomorrow a stock market correction should occur. From a strictly economic point of view, this correction is inevitable, it remains suspended with the evolution of the interest rates which orders the continuation of the stock market valuation. It will not have a catastrophic effect if the Low 90’s consumption is supported by a better income dynamic; we are far from it, the revenues of the low 90 stagnate or fall in constant value. Only their volume increases under the influence of quantitative factors (number of households, working hours, number of employees at work).

The FED policy has suspended a sword of Damocles over the head of the recovery

A stock market turnaround would produce a contraction of top ten consumption with an immediate recessionary effect on the entire US economy. It is the households of the top ten who are the active elements of the growth, the low 90 follows with an inevitable delay and capacities of expenditure lower.

For several months, we have left aside the question of the public debt, this shelving is not worth repudiation: in case of a new contraction of the American economy the question of the American public debt, it’s financing, and his remuneration would immediately come back to the fore.

We will soon turn to real estate assets to examine whether they contain the same potential danger for the US “recovery”.