Global wealth inequality and manufactured scarcity

What happened: Global wealth inequality is escalating, with roughly 10% of the world's population living in extreme poverty despite overall global wealth growth. This is driven by a "growth" strategy that benefits the wealthy disproportionately, according to economists like Olivier De Schutter. In the U.S., the top 10 wealthiest suburbs have average incomes as high as $612,000, with Scarsdale, New York, topping the list for three consecutive years.

Market impact: This narrative impacts sectors like luxury goods and real estate, which benefit from high-end consumer spending. Companies like LVMH and Berkshire Hathaway (which has significant real estate holdings) may see increased demand in these affluent areas. Conversely, it affects sectors like affordable housing and healthcare, with companies like HCA Healthcare and Lennar facing challenges due to income disparities. It also influences ESG investing, with funds focusing on inequality reduction potentially seeing increased inflows.

What to watch next: The upcoming World Inequality Report (due in late 2022) will provide updated data on global wealth distribution. Additionally, the U.S. Census Bureau's annual income and poverty report (September 2022) will offer insights into domestic income inequality. Lastly, watch for policy responses, such as the U.S. Senate's consideration of the Build Back Better Act, which includes provisions aimed at reducing inequality.