The economy is doing great. Depending on which economy you’re living in.

The stock market is at record highs. Luxury travel is booming. High end restaurants have wait lists. Consumer spending among higher income households is up and showing no signs of slowing down. If you own assets, have a strong income, or both, things probably look pretty good from where you’re standing.

But there’s another economy running alongside that one and it tells a very different story.

And the Federal Reserve’s July meeting minutes makes it clear as day. The Fed stated that consumer spending had strengthened amongst high income earners however they acknowledged that low and moderate income households were under increasing strains, with inflation destroying their disposable income. That’s the central bank of the United States acknowledging in its own language that two economies exist simultaneously.

For the bottom 80% of earners, overall spending has not outpaced inflation in six years. SIX YEARS. That means for most Americans their standard of living and purchasing power hasn’t meaningfully improved since the pandemic. Meanwhile the top 20% of households now hold nearly 72% of total household wealth.

If you want to see what that divide looks like in real life, look at Gary, Indiana right now.

On August 11th a major storm hit Gary and knocked out power for over 370,000 people across Northwest Indiana. As of today, nearly two weeks later more than 60,000 residents of Gary are still without electricity. No power, no refrigeration and no AC in August heat. One resident put it simply. “We’re always in survival mode in Gary.”​

Gary, the home of the Jackson 5, is a rust belt city with deep roots in the American steel industry and decades of economic disinvestment that followed its decline. It is also almost 80% Black. I’m confident that plays a role in the lackluster response to restoring power, although I’m not sure McDowell County, West Virginia would fare much better if they faced similar circumstances. This isn’t only a racial story. It’s an economic one. But those two things are rarely unrelated.

What’s crazy is, prior to the storm residents of Gary were already raising concerns about the mass amount of AI data centers being built in the region, which are pulling tons of electricity from the same grid that just failed an entire city for two weeks. The infrastructure powering the AI boom and the infrastructure that left Gary in the dark are connected. And that’s not a coincidence.

I write about investing every week and I believe in it. But moments like Gary make me pause. The stock market hitting record highs and a city of 70,000 people going without power for two weeks aren’t separate stories. They’re the same story told from two very different zip codes.

— Stock Savvy Dad
​Invest smarter, build wealth, be a savvy dad.