{"id":17908,"date":"2025-10-30T11:31:29","date_gmt":"2025-10-30T18:31:29","guid":{"rendered":"https:\/\/canary.kcprod.info/blog\/?p=17908"},"modified":"2025-10-30T14:37:03","modified_gmt":"2025-10-30T21:37:03","slug":"vested-interest-premium-butter-consumer-spending-k-shaped-recovery","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/vested-interest-premium-butter-consumer-spending-k-shaped-recovery\/","title":{"rendered":"Vested Interest: Why the Existence of \u201cPremium Butter\u201d Might Be a Key Macroeconomic Indicator"},"content":{"rendered":"\n

Welcome to another <\/em>sneak preview edition<\/em><\/a> of Vested Interest, our forthcoming newsletter about what the financial and economic news might mean for your money, career, and life in general. Please get in touch via <\/em>askwealthfront@wealthfront.com<\/em><\/a> with comments and questions about other topics you\u2019d like us to cover.<\/em><\/p>\n\n\n\n

A few weeks ago, Bloomberg published<\/a> an article about a new phenomenon in the world of American dairy products: People who are obsessed with super, super, super expensive butter. Like, butter that costs 15 times as much as the regular stuff<\/a> and sells out immediately in hyped-up online flash sales. (There\u2019s more fat in it and it tastes like fancy French<\/em> butter, is the idea.) It was an entertaining article \u2014 and a good illustration of why some economists have growing concerns about the ways different groups of Americans are spending their money.<\/p>\n\n\n\n

What do we mean by that? <\/strong>Well, viewed from afar, the U.S. looks like a train chugging happily along the tracks, economy-wise. The stock market is hitting record highs, which means investors as a whole expect American companies to earn a lot of money going forward. Consumer spending is steady<\/a>, and given that \u201cpeople buying things\u201d is how companies make money in the present, that\u2019s also good. The Federal Reserve is lowering<\/a> interest rates, which typically leads to more spending and more growth because it makes borrowing easier. As the Bloomberg story notes, U.S.-made premium butter is meeting the growing demand for less-processed food<\/a> and filling a need for American groceries created by tariffs on foreign goods.\u00a0<\/p>\n\n\n\n

Great! What\u2019s not to love?<\/strong> The issue is who\u2019s<\/em> doing all the spending and investing and having happy economic feelings. What economists like KPMG\u2019s Diane Swonk<\/a> are noticing is that a lot<\/em> of this activity is being driven by Americans at the very top of the income scale \u2014 the kind who buy ultra-high-end dairy products, for example. According to a recent analysis by Moody\u2019s<\/a>, half of U.S. spending, at the moment, is coming from the top 10% of earners.<\/p>\n\n\n\n

The top one percent of wealthiest Americans own about half<\/a> of the country\u2019s stocks and mutual funds, too, which means they\u2019re the ones who are reaping most of the benefits from the AI stock surge. And higher earners are just about the only group feeling good about their economic prospects right now in surveys of consumer sentiment<\/a>.<\/p>\n\n\n\n

But to play devil\u2019s advocate: So what? <\/strong>Who cares who the money is coming from as long as it\u2019s circulating through the economy and keeping people employed in Vermont\u2019s thriving luxury butter industry, right?\u00a0<\/strong><\/p>\n\n\n\n

Well, there are a few reasons to watch this closely.<\/strong> BCA Research<\/a> equity strategist Irene Tunkel<\/a> walked us through them\u00a0\u2014 and what it starts with, she says, is that \u201cthe middle class is spending everything they\u2019re making.\u201d In other words, there is no wiggle room for most Americans, at the moment, to start spending more<\/em> than they already are. One way that people sometimes address this is by engaging unsustainably risky borrowing to pay bills \u2014 think subprime mortgages before the Great Recession. Another is, well, spending less money. (The New York Times recently noted that demand for Hamburger Helper<\/a> is on the rise.)\u00a0 And while saving instead of spending might be a wise move for individual families, it can be bad news for the companies that depend on their business.<\/p>\n\n\n\n

People with higher incomes, meanwhile, don\u2019t have<\/em> to spend all the money they make, and they especially don\u2019t have to spend it on luxury goods.<\/strong> It\u2019s a lot easier to cut back on something like a $15 stick of butter than it is to stop paying the phone bill. And if high earners get spooked (by a high-profile bankruptcy or stock downturn, say) they might cut back on that kind of so-called \u201cdiscretionary\u201d spending.\u00a0<\/p>\n\n\n\n

If all of these possible events were to occur at the same time, it would have a negative ripple effect across the broader economy. But there are reasons to believe things might work out fine, too; the major banks that have announced earnings this quarter, for instance, say things are still going great<\/a>. And to reiterate, actual overall consumer spending numbers themselves<\/a> have been strong since June.\u00a0<\/p>\n\n\n\n

As to what it means for you?<\/strong> Whether or not you think luxury butter is a symbol of distorted spending patterns probably shouldn\u2019t change your long-term strategy. The available evidence shows that trying to anticipate what the economy or the market will do is very, very hard<\/a>. But thinking about what might<\/em> happen can be worth doing when it comes to things like building up rainy-day funds and making decisions about career moves and potential major expenses \u2014 not to mention helping avoid the classic error of selling low and buying high<\/a> in a panic after bad news hits. (Past results famously do not<\/em> guarantee future performance, but there has not been a U.S. market crash yet that prices did not eventually recover from<\/a>.)


<\/p>\n","protected":false},"excerpt":{"rendered":"

Welcome to another sneak preview edition of Vested Interest, our forthcoming newsletter about what the financial and economic news might mean for your money, career, and life in general. Please get in touch via askwealthfront@wealthfront.com with comments and questions about other topics you\u2019d like us to cover. A few weeks ago, Bloomberg published an article […]<\/p>\n","protected":false},"author":10038,"featured_media":17909,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1315],"tags":[],"coauthors":[2542],"class_list":["post-17908","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-insights"],"acf":[],"yoast_head":"\nPremium Butter, an Economic Rorschach Test | Wealthfront<\/title>\n<meta name=\"description\" content=\"A few weeks ago, Bloomberg published an article about a new phenomenon in the American dairy world: People who are obsessed with super expensive butter.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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