On Wednesday, August 1st, the Dow Jones Industrial Average shot up 150 points to 13,362. Even with the recent drops, the indexes are in record-breaking territory.
On the other hand, more than two thirds of Americans believe the U.S. economy is either in a recession now or will be in the next year, according to a new NBC/Wall Street Journal poll.
Wall Street vs. Main Street. Who’s right?
“The macro-economy is reasonably healthy,” says Jon Corzine, governor of New Jersey and former CEO of Goldman Sachs, in an article in the August 2 edition of The Wall Street Journal. “But the reality for the majority of Americans is they’re lucky if they hold on…The numbers are different from what the feel is on Wall Street.”
This leaves plenty of economists scratching their heads. While the macro economy experiences sustained growth with low inflation, low unemployment, and rising stock values, it appears that the American population is experiencing a growing anxiety. One theory put forth to explain this duality has been labeled “Plutonomics.” Advocated by Ajay Kapur, a global strategist at Citigroup, he suggests that America has become a plutonomy, in which the wealthier segment of society is now so large and diverse that the rest of the population has a reduced role in keeping the overall macro economy healthy. When it comes to overall national spending, the top quintile of Americans represent 60% of the total.
As advisors, you have one foot in the world of your clients, with their everyday needs and concerns, and at the same time, you are part of the financial services industry. In other words, you stand at the intersection of Wall Street and Main Street. As such, you are uniquely positioned to gauge the realities between these two worlds.
What’s your take on the differing experiences between Wall Street and Main Street? Is America now a plutonomy? If so, is the recent trend toward moving up-market more than just a new business strategy—is it an essential move for survival as Wall Street and the overall American economy tilts towards the high net worth?
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I think Corzine is pandering. Trying to forward big govt as a solution. He should give ALL his money to the many layers of govt and then I’ll listen to his solutions.