The last three years have upended everything about the way we expect the economy to work. That’s at least partly why many rich people don’t seem to be sweating economists’ warnings that Donald Trump’s policies would cause inflation — which has finally come down to a normal level — to spike again.
Inflation dings all wallets, whether you’re a Wall Street banker or a public school teacher. But it hurts in different ways.
Higher prices for rent and food, areas where blue-collar workers tend to spend a bigger chunk of their income, hurt the middle- and low-income groups hardest. And, historically, high inflation has also hurt wealthy people because it eats into corporate profits and creates a drag on the stock market.
But the pandemic-era inflationary period played out unlike any other in history, and wealthy people made out like bandits.
“It’s been a good run for higher-income people with assets,” said Kent Smetters, a professor of business economics and public policy at the University of Pennsylvania’s Wharton School. “There’s no question the stock market has gone up quite a bit more than inflation … we’ve had almost two years in a row of 20% increases, and that’s pretty amazing.”
Many rich Americans who might have once had an icky feeling about the prospect of surging inflation in the past suddenly don’t seem too worried about it. And that may be because the only real inflation we’ve seen in decades was a multi-year profit bonanza for them.
And that has provided a permission structure for some wealthy Trump supporters to shrug their shoulders at his inflationary economic agenda.
