In times of economic volatility, prosperity is often an issue that is politicized.
Under Trump 2.0, this means debate about who should be taxed and how much, What is ‘wealthy’, And how this private capital should be mobilized in order to clear up the concerns about public financing.
The “one big, beautiful bill” of the Oval Office shared the opinion after estimates from the Budget Office Congression Budget (CBO) found that the guidelines have the poorest Americans about 1,600 US Income of the richest households An average of $ 12,000 a year.
This is with the friendly approval of political changes such as an increased liberation threshold for lands and gifts to 15 million US dollars and a change in the capacity amount for deductions for state and local taxes (Salt) from $ 10,000 to $ 40,000.
A problem with current debates about wealth taxes, says UBS’s chief economist, Paul Donovan, is that the rich voters of America often do not know that they are rich.
Last week about a round table, Donovan said: “A fairly interesting topic that we see more and more in discussions.
“So people will say:” Yes, we have to do a wealth tax for millionaires, but not for me, I don’t count as a millionaire “, even though they actually have an apartment with two bedrooms in Manhattan. They are by definition, a millionaire.”
Donovan continued that social media also distort the prosperity. Even if the inequality has not changed, people are worse due to the online extravagance.
“As a result, people may be confusing between their perception of their wealth and the realities of their assets,” added Donovan.
“Many people are wealthy, but they accept themselves as somehow disadvantaged because they do not lead the best life of a social media influencer.”
Luxury
With Prosperity becomes socially becoming an increasingly split topic-Sogar The wealthy distance from the reality of their situation consumers already dominate their status symbol purchases and experiences.
Bain & Co’s Spring update to the luxury sectorPublished in the past week, the personal goods business in the industry in particular has shrunk.
Claudia d’Arpizio, One of the authors of the reporttold Assets The expression “luxury shame” was first shaped during the financial crisis in 2008, as a prosperity in view of the millions of Americans who had lost their houses and jobs, was perceived when Gauche was perceived.
D’Arpizio added that luxury shops with their purchases continue to send consumers widespread white paper bags, since individuals did not want to be seen with designer carriers.
“In the USA, this was self -induced; people corrected their behavior because they were ashamed,” continued D’Arpizio. The trend, which is now led by Chinese consumers, is state.
She explained: “This is a communist regime that has promoted luxury consumption in the past 15 years when people became more wealthy and richer every year. Now that growth slowed down, there is unemployment in recent generations, so try to prevent wealthy people, do not show that they are wealthy.
This social tension spreads to the west, added D’Arpizio, which means that luxury brands should concentrate less on the perception of elite and more on being a bastion of culture and innovation.
Get richer
Apart from that, just because the rich either are not enough or do not know that they are rich, this does not mean that the engines that generate their assets move more slowly.
“There are two independent drivers that we have to take into account that have no influence on the driver of wealth growth,” said Donovan in response to a question Assets. “The first of them is the rise of business nationalism.”
You just have to take a look at Trump’s America-First initiative, but Donovan added that behavior is also widespread in nations like China.
He added: “For foreign companies that we have seen, for example, at European luxury brands in China, there is quite often an hostility to foreign companies.”
Donovan added that a second factor that shapes the consumption approach of the empire is that her focus is less on goods and more on fun.
“A question that I have asked often is: What does an economist mean with fun? The answer is everything you can post about Instagram“Donovan tells Fortune.” So it is foreign trips, it is meals, they are Taylor Swift concerts. To be fair, it is also clothing, because if you instagrant your latest meal, you must of course do this in a new outfit.
“These trends, which are independent of the entire creation of prosperity … we have to work on it because they can give shame about prosperity if the consumption pattern actually changes for other reasons.”
