Depending on the rich

Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon. The top 10pc of earners — households making about $250,000 a year or more — are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets. Those consumers now account for 49.7pc of all spending, a record in data going back to 1989, according to an analysis by Moody’s Analytics. Three decades ago, they accounted for about 36pc. All this means that economic growth is unusually reliant on rich Americans continuing to shell out. Moody’s Analytics estimates that spending by the top 10pc alone accounted for almost one-third of gross domestic product. Between September 2023 and September 2024, the high earners increased their spending by 12pc. Spending by working-class and middle-class households, meanwhile, dropped over the same period.

(Adapted from “The US Economy Depends More Than Ever On Rich People,” by Rachel Louise Ensign, published on February 23, 2025, by the Wall Street Journal)

Trump’s rising fortunes

At the beginning of the year, Amazon, a company that prides itself on frugality and sharp negotiating, announced it agreed to license a documentary about Melania Trump’s transition back to first lady. It paid $40m to do so, the most Amazon had ever spent on a documentary and nearly three times the next-closest offer. The Amazon deal is just one of the ways the new first family has benefited from its return to the White House. Companies have directed about $80m to members of the Trump family and the Trump presidential library so far, as defendants settle lawsuits the president previously filed against them and corporations enter into new business ventures, including the documentary. This figure doesn’t include potential gains from crypto pursuits. The pace and volume of the family’s moneymaking efforts so far are unprecedented, surpassing even the activity of Trump’s first term, which drew condemnation from ethics watchdogs and congressional Democrats.

(Adapted from “How The Trumps Turned An Election Victory Into A Cash Bonanza,” by Rebecca Ballhaus, Dana Mattiolo and Annie Linskey, published on February 13, 2025, by the Wall Street Journal)

The rise of super-billionaires

In 1987, Forbes published its first billionaire’s list, featuring 140 individuals whose combined wealth totalled $295 billion. At the time, the wealthiest person in the world was Japan’s Yoshiaki Tsutsumi, a real estate tycoon worth $20bn. Today, the world’s richest person, Elon Musk, is worth $419.4bn, roughly 21 times as much as Tsutsumi at his peak and more than two million times as much as the median net worth of an American household. As the ranks of global billionaires have swelled dramatically in recent years, a new category of ultrarich has emerged — the super-billionaire. Musk is one of just 24 people worldwide who qualify for that distinction, which is defined as individuals worth $50bn or more. Super-billionaires’ fortunes total $3.3tr, equivalent to the nominal GDP of France.

(Adapted from “Meet The World’s 24 Superbillionaires,” by Katherine Clarke, published on February 25, 2025, by the Wall Street Journal)

Nvidia’s challenges

One honourable exception to the roster of tech billionaires standing behind Donald Trump at the president’s inauguration on January 20 was Jensen Huang, the chief executive of Nvidia. He took a quieter approach, instead meeting Mr Trump at the White House just over ten days later. Earlier that week his company, the dominant supplier of AI chips, had lost $600bn in market value during a sell-off precipitated by the release of the latest AI models from DeepSeek, a Chinese firm. Mr Trump’s plans to respond to the upstart model-maker may have been as much on Mr Huang’s mind as DeepSeek itself. Nvidia’s shares have largely recovered and it retains a dominant position around the world. But that has not spared it from being used as a geopolitical football in China. Nor does it protect it against two trade-stifling levers that Donald Trump’s government may be about to pull.

(Adapted from “Nvidia Is Fighting Both Trump And China,” by The Economist, published on February 25, 2025, by The Economist)

Published in Dawn, The Business and Finance Weekly, March 3rd, 2025