Livin’ in the USA!

For most of the one percenters, having that 42% of the nation’s wealth has been a bit of an embarrassment, and while they really can’t hide where they live, many have avoided the indulging in the others trappings of mega-wealth… including a few in the next top 4 one-percentiles. But notwithstanding the plight of the chronically unemployed or the bottom-level pay scales and opportunities that constitute most of the new jobs that have replaced those of old, the recession is long over, and the recovery is in full swing? Right?

I mean you read that news in the press all the time, and even the fed is already backing off its program of buying questionable paper under the mantra of “quantative easing.” That the statistics the government uses involve simple analysis of the stock market (who measures their income by performance in the stock market, by the way?) and rather meaningless, unquestioning acceptance of unadjusted unemployment rates, well, that doesn’t really matter, does it? That the income gains in too many manufacturing jobs have not gone to new workers but to the investors in all that new robotic equipment is irrelevant, right?

The numbers say we are coming back like a speeding freight train. After all, the government needs to take credit for a “recovery” even if that “recovery” is pretty much limited to the top of the food chain. As I’ve shown in numerous prior blogs, 90% of the income gains since 2008 have gone to the top ten percent of earners, and average Americans have seen an erosion in buying power every year since 2002.

An excerpt from the January 2^nd Washington Post, which suggests that entrepreneurial efforts and invention-oriented minds may just be the next generations’ paths to survival and prosperity, talks about the reality for most of the coming generations: “We have moved from the Great Recession to the Great Malaise. Despite massive government stimulus, the world’s largest and most advanced economy continues to limp sideways. Unemployment remains stubbornly high. Growth remains slow and prospects for employment growth remain bleak. Wages continue to stagnate. Recent college graduates and young professionals may well be the first generation to live a life inferior to those of their parents, conventional wisdom holds. The United States has entered a period of slow decline, much like the sun finally setting on the British Empire in the 20th century.”

But wait…  since it is so obvious by reading government reports and newspaper headlines that we are back into golden days, it’s time to reap the rewards and take off the restraints on big ticket spending – if you can really afford it. And fast, exotic cars are the first place these big spenders have been headed: “A legion of buyers… buoyed by a growing economy and a soaring stock market, are shedding whatever reluctance, or self-imposed restraint, they had during the recession by entering showrooms and leaving with trophy cars… ‘Luxury is not a dirty word anymore,’ said Robert Ross, an automotive consultant with Robb Report, a lifestyle magazine for wealthy readers. ‘In 2008, luxury was a dirty word.’” New York Times, January 1^st.

Bentleys, Rolls, Ferraris, Maseratis, Porsches, Mercedes Benzes, Jaguars, etc. are rolling out the door at record levels, maybe with a Tesla S or the new Corvette if you want to throw in some American brands. But American brands – and the jobs that would go with them – are a tiny minority of purchases when compared with the European exotics sold in the U.S. The rich seem to be creating jobs alright… just not for American labor. “Maserati is opening dealerships around the United States, Rolls-Royce just finished its most profitable year ever and even mainstream luxury automakers like Mercedes and Jaguar are finding an eager market for their most expensive models, which push past $100,000.

“The sales gains at the highest end of the market are far outstripping those in the auto industry as a whole, which, because of easier credit and pent-up demand, have risen 8.4 percent from January through November… Maserati has led the way, with a 55 percent sales increase this year, followed by double-digit gains from Rolls-Royce, Jaguar, Lamborghini, Porsche and Bentley, according to figures from the Autodata Corporation. Many of the brands sold more cars in the first 11 months of 2013 than they did in 2007 before the recession.

“Among the hungriest consumers for luxury automobiles are entrepreneurs amassing new wealth in industries like technology and energy, and executives in Fortune 500 companies whose stocks have soared along with the broader market, analysts and industry executives say…

“Enthusiasm for luxury nameplates is also unfolding around the country, beyond areas of concentrated wealth like New York and Southern California. Outside of Minneapolis, for example, Morrie’s Luxury Auto received 16 of Maserati’s Ghibli sedans two days before Christmas and had two left on Dec. 26… Morrie’s is also selling two to four Bentleys a month at an average price of $225,000. About 40 percent of those sales are to companies that use them to transport clients and executives, the dealership said. It has benefited from the rising fortunes of large public companies in the area like 3M, Target and General Mills… During the recession, ‘we were lucky to get one out a month,’ said Kenny Reller, a manager at the dealership.

“A dealer near Cleveland, the Collection Auto Group, which owns 28 dealerships, including Porsche, Lotus, Maserati and Aston Martin, added Rolls-Royce last month, becoming the automaker’s 35th dealership in the United States… ‘Cleveland is in a renaissance,’ said Bernie Moreno, president of the dealership. ‘We call it the three Ms: medical, manufacturing and media.’

“Rolls-Royce, which is owned by BMW, has bounced back since 2008, recovering in 2009 with the introduction of the Ghost, a smaller sedan with an average price above $300,000. The Ghost [pictured above] gave those interested in owning a Rolls-Royce an alternative to the Phantom, which has a base price of $402,940 and is designed for use with a chauffeur.” NY Times. With average American car owners keeping the vehicles 11 years before replacing them, a number that has grown longer over the past decade, perhaps you might see a touch of irony in the new rash of high-end spending based on a belief that the entire American economy is now on solid and financially lucrative soil. For whom? And exactly what has your government done for you lately other than keep the taxes for those at the top of the food chain low? Oh, that wasn’t for you. Sorry, my mistake.

I’m Peter Dekom, and while we have always known that the rich get richer, we had always assumed that at least the rest of us weren’t getting poorer… but that was then!