Retail Sales Rise on Strength of the Rich & Senate Confirms Stephen Miran to the Fed

Summary

Prof G Markets — Episode Summary
Episode: Retail Sales Rise on Strength of the Rich & Senate Confirms Stephen Miran to the Fed
Date: September 17, 2025
Hosts: Ed Elson (with guest Mark Zandi, Chief Economist at Moody's Analytics)
Podcast: Prof G Markets by Vox Media Podcast Network

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Episode Overview

This episode dissects two front-page market stories: the optimism around unexpectedly strong retail sales figures in August, and the Senate confirmation of Stephen Miran, an active White House advisor, as a Federal Reserve governor. Host Ed Elson, joined by Mark Zandi, delivers a "no mercy, no malice" perspective, questioning whether the reassuring headlines about American consumer strength reflect a healthy broad-based economy or are evidence of increasing economic bifurcation, with prosperity and spending concentrated at the top.
The discussion pivots to examining Miran’s appointment, its implications for Fed independence, and what this might signal for the future of monetary policy.

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Key Discussion Points & Insights

1. Retail Sales: Strong Numbers — But For Whom?

[01:56] – [10:00]

• Headline Data: August retail sales rose 0.6% month-over-month, doubling economist expectations.

  • Ed Elson: “Data from the Commerce Department showed sales rose 0.6% from July. That is double what economists forecasted… The reaction across most media outlets was one of optimism.”

• The Top-Heavy Reality: Mark Zandi reveals that the top 10% of Americans now account for nearly half (49.2%) of all consumer spending—a historic high, up from roughly one-third 30 years ago.

  • Zandi: “So the folks in the top 10%… they account for almost half of all the spending. And it's even more top heavy than that… the top 3.3%… account for about 25% of the spending.” [05:09]

• Bottom 80% treading water: Spending among the lower 80% has only tracked with inflation over the last four years, resulting in little real gain.

  • Ed Elson: “The bottom 80%… have increased their spending the past four years by around 25%. But inflation is pretty much at that level. So they're basically just tracking with prices.”

• Asset Prices Drive Spending: Zandi explains that soaring asset prices have disproportionately benefited the wealthy, fueling their outsized spending—the so-called wealth effect.

  • Zandi: “Stock prices are at record highs… Housing values have also risen quite considerably. They're up almost 60% since the pandemic hit… if stock prices are rising, housing values appreciating, then it makes them more willing to spend.” [08:13]

• Economic fragility: The economy's reliance on affluent households is a source of both macroeconomic vulnerability and societal tension.

  • Zandi: “It means… that the US economy is very dependent on a very small group… If they slip up for whatever reason… that's a real threat to the economy… And then of course the folks in the bottom and middle… they're struggling to make ends meet… There’s numerous implications of this, none of them good.” [06:18]

2. The Illusion of Economic Health

[09:54] – [12:32]

• Headline Data Skews Perception: Much of the headline economic data increasingly reflects the behaviors of the top 10%, not the broader public.

  • Ed Elson: “…this possibility that actually the data that we’re hearing and we’re getting from our government… is kind of useless in a way in that it’s only really… reflecting the behaviors of rich people…”

• Statistical Distribution Problems: Zandi highlights a classic economist's warning: averages (means/medians) mask the reality at the distribution's extremes.

  • Zandi: “We're looking at the averages, the means, the medians… but the distribution’s all skewed. So it’s… not representative of the reality of what the world feels like for most Americans.” [11:17]

• Why Most Americans remain dissatisfied: Despite low unemployment and rising aggregate spending, the majority are not experiencing meaningful improvement.

  • Zandi: “This goes perhaps to why many Americans… are feeling pretty punk about the economy. This isn’t working for me…”

3. Implications for Monetary Policy & the Federal Reserve

[12:32] – [15:49]

• Fed’s Focus Remains Jobs: Zandi says the Fed should continue focusing on the flagging job market, where job growth has stalled, rather than trying to solve wealth inequality, which is outside its mandate.

  • Zandi: “Front and center for the Fed… is the job market… There's been no effective job growth in recent months… I don't think it's the Fed’s job to fix… income and wealth distribution… that's in the purview of Congress and the administration.” [13:10]

• Rate Cut Prediction: Both hosts expect a 25 basis point cut at the meeting, noting that while inflation has picked up due to tariffs, larger cuts are possible in the future if the economy continues to weaken.

  • Zandi: “So I think it's a quarter point, but… if things don't get back on the rails here… they can cut more aggressively.” [14:38]

• Bottom line: Elson summarizes, echoing the episode's central worry:

  • Elson: “We live in a bifurcated economy where… a handful of wealthy households… are driving growth and pushing all of these numbers up. But behind that data there is a darker story… the majority… are simply trying to keep up.” [15:55]

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4. Stephen Miran: Senate Confirmation and Fed Independence

[20:43] – [25:30]

• Historic Appointment: Stephen Miran, a White House economic advisor, is confirmed as Fed governor—the first time in 90 years a sitting White House official joins the Fed board.

  • Ed Elson: “This is the first time in 90 years that a sitting White House official has served on the board of the Fed.” [20:43]

• Résumé & Political Leanings: Miran’s career traces from Harvard to hedge funds, developing a reputation for letting his political ideology inform his investment decisions, then joining Trump's economic team where he authored key policy documents underpinning the administration's approach to tariffs.

  • Elson: “His colleagues said they, quote, worried that Miran's investment decisions could be negatively influenced by his politics.”

• Aggressive Monetary Policy Stances: Miran is skeptical of "tariff-induced inflation" and publicly lobbies for more executive branch influence over the Fed.

  • Miran (clip): "There's just still continues to be no evidence whatsoever of any tariff induced inflation." [23:04]
  • Ed Elson (on Miran): “He wants the executive branch to have more control over monetary policy… The idea is really to place more political pressure on the Fed, which is of course, exactly what Trump wants to do.”

• Fed Independence at Risk: Miran plans to take only an unpaid leave from his White House job while serving at the Fed, not resigning—setting a precedent that could erode the Fed's autonomy.

  • Elson: “…the White House has now installed one of its own officials into the Fed… the fact of the matter is the White House has now installed one of its own officials into the Fed.”

• Precedent and Warnings: Elson notes the concern—if this arrangement endures, or is combined with attempts to purge dissenting Fed governors, it could spell lasting changes for the central bank's independence.

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Notable Quotes & Memorable Moments

• “The American economy is very dependent on the well to do. The folks that have high income, high net worth, they're driving the train more so than I think anyone would have thought.” — Mark Zandi, [05:09]

• “You might think the American consumer is doing well… until you realize it's actually not Americans that are spending, but rich Americans that are spending.” — Ed Elson, [03:37]

• “There's just still continues to be no evidence whatsoever of any tariff induced inflation.” — Stephen Miran, [23:04] (aired by Elson to critique)

• “We're looking at the averages, the means, the medians… but the distribution’s all skewed. So it’s… not representative of… what the world feels like for most Americans.” — Mark Zandi, [11:17]

• “We live in a bifurcated economy… wealthy households are spending, driving growth… But behind that data there is a darker story… the majority… are simply trying to keep up.” — Ed Elson, [15:55]

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Timestamps for Important Segments

• [01:56] — Ed Elson recaps market news; setting up the retail sales discussion
• [04:32] — Mark Zandi joins; first reactions to the consumer spending split
• [08:13] — Zandi explains asset-driven wealth and spending
• [11:17] — On the limits of aggregate economic data
• [13:10] — Discussion of the Fed’s policy goals in light of inequality
• [14:38] — Zandi’s rate cut prediction
• [15:55] — Concluding synthesis: “bifurcated economy”
• [20:43] — Miran’s Fed confirmation: background & implications
• [23:04] — Clip: Miran's views on tariffs and inflation
• [25:30] — Concerns about Fed independence & closing comments

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Conclusion

This episode challenges the conventional reading of robust economic data, exposing how aggregate numbers can mask growing inequality and highlighting the risks of a top-heavy economic recovery. It critiques both the substance and optics of Stephen Miran’s appointment to the Fed, suggesting it marks a new era of politicization at the central bank.
Listeners come away equipped not just with market facts, but with a sharper sense for how to interrogate headline data and the decisions shaping U.S. monetary policy.

Transcript

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[Ed Elson]

Today's 23. That's how old Isaac Newton was when he discovered the law of gravity in just a few years. He also invented calculus as well as the world's first reflecting telescope. However, he never co hosted a podcast.

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[Ed Elson]

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[Ed Elson]

Welcome to Profit Markets. I'm Ed elson. It is September 17th. Let's check in on yesterday's market vitals. All three major indices declined marginally from their highs as traders waited for the Fed's interest rate decision due this afternoon. Treasury yields were also muted ahead of the announcement. Meanwhile, the dollar hit its lowest level since July and gold notched yet another record. And finally, Oracle shares jumped as much as 6% on reports that US TikTok operations will be under the control of Oracle and Silver Lake and Andreessen Horowitz. Oracle will also reportedly keep its current cloud contracts with TikTok. Late in the day, President Trump signed an executive order to delay the deadline for the TikTok ban yet again until December 16th. Okay, what else is Happening. Retail sales data came in for August and it was hotter than expected. Data from the Commerce Department showed sales rose 0.6% from July. That is double what economists forecasted. As expected, the reaction across most media outlets was one of optimism. CNN said against the odds, Americans are still spending axios quote retail sales surprise as Americans increase spending in August, quote consumers continue to open their wallets despite rocky labor market conditions. We also saw a lot of celebrating on social media too. However, there was another piece of data that came out yesterday which should probably change your conclusions. This data came from our friend Mark Zandi of Moody's analytics who found that as of this quarter, the top 10% of earners in America now account for 49.2% of all consumer spending. That is the highest number in history. You compare it to 30 years ago when the top 10% accounted for roughly a third of consumer spending. Put another way, this retail data might look good. You might think the American consumer is doing well, they're spending their money. Until you realize it's actually not Americans that are spending, but rich Americans that are spending. Whatever growth we saw in retail last month is basically just the top 10% of America doing all the heavy lifting. It's rich people that are creating these encouraging numbers. And of course, that isn't very encouraging at all. So here to unpack this new data, we are bringing on the guy who dug in and analyzed the data, the one and only Mark Zandi. Mark, thank you for joining us again on Prof. G Markets.

[Mark Zandi]

Anytime there good to be on.

[Ed Elson]

So I want to get into this analysis. You know, we saw this retail sales data which just came out, which gives you this image that the consumer's doing well in America. We're spending money more than we were last week. But then you also have this analysis which shows that half of the spending is the top 10% of Americans.

[Mark Zandi]

And.

[Ed Elson]

That'S the highest share ever. So just your initial reactions to that data that you found, what does it tell us about the US Economy right now?

[Mark Zandi]

Yeah, the American economy is very dependent on the well to do. The folks that have a high income, high net worth worth, they're driving the train more so than I think anyone would have thought. So the folks in the top 10% of the income distribution, so you're making well over a quarter million dollars a year. They account for almost half of all the spending. And it's even more top heavy than that. If you look at the folks that are in the top 3.3% of the income distribution, don't ask Me why we picked that cutoff, but we did. They account for about 25% of the spending. So the American economy is moving forward. It's not in recession, but obviously it's the folks at the tippity top of the income distribution, the wealth distribution that are driving the train.

[Ed Elson]

This tells the story of America in my view. I mean the chart really tells the story where you had the top 10% contributing to a third of the spending and then the line keeps going up and keeps going up, keeps going up and now it's hitting 50%. Does this concern you at all? What were your reactions when you collected this?

[Mark Zandi]

Yeah, I'm not comfortable with it on a number of levels. I mean one, it means from a macroeconomic perspective that the US economy is very dependent on a very small group of high income, high net worth households. And if they slip up for whatever reason, let's say the stock market corrects, goes down 10, 20, 30%, stays down, those folks are going to turn more cautious. It's not like they're going to curtail their spending. They're very, very well off, but they'll turn more cautious. The negative, so called negative wealth effects and that'll be a real threat to the economy because the economy is obviously already struggling very significantly. And then of course the folks in the bottom and middle parts of the income distribution, you know, they're struggling to make ends meet their income, their spending is barely keeping pace if at all with the rate of inflation. So the real spending hasn't increased. And that obviously creates all kinds of societal issues and I think goes at least partially explaining our fractured politics, which obviously has all kinds of implications. So there's numerous implications of this, none of them good.

[Ed Elson]

How much of this is because of the increases we've seen in the stock market? I mean just looking at this data, you've got the bottom 80% who have increased their spending the past four years by around 25%. And you think that sounds maybe promising, but inflation is pretty much at that level. So they're basically just tracking with prices top 10%. Their spending is up 60% in the past four years. So they're spending more than ever. How much of that is because asset prices have gone up? We're looking at record highs in the stock market. Housing prices have obviously gone up too. Is this a story of my stocks are up and therefore I'm more confident and I'm more willing to spend?

[Mark Zandi]

I think that's a big part of it. You know, economists call it the wealth effect. I mean people Are wealthier, feel wealthier. You know, they have more resource to go out and spend. I mean, they, they can borrow against that wealth. Many of the highest income households, that's what they do. They borrow against their wealth and spend and they feel more confident as they, you know, should. I mean, they're sitting on a pretty large nest egg and you know, that nest egg is getting bigger. If stock prices are rising, housing values appreciating, then it makes them more willing to spend. So it's both being more willing and able to spend, and that's what they do. And of course, asset prices are up a lot. Stock prices are at record highs and kind of catapulted higher here. You know, AI is driving a lot of that, but there's, you know, plenty of stockholder wealth. Housing values have also risen quite considerably. They're up almost 60% since the pandemic hit. And that's nationwide. So, you know, in parts of the country, they're up 70, 80, 90%. So, yeah, people are feeling not wealthy. And these folks, they don't owe anything. You know, they, if they own a mortgage, it's only because it's free money. They got it at the mortgage back in the pandemic, two and a half, three, three and a half percent. So it's kind of effectively free money. And they don't have any credit card debt. They don't, you know, they don't own debt on their auto. They're not at all, you know, sensitive to the higher interest rates on debt. So, you know, you add it all up, that, I think is the larger, the explanation for why they're out spending as aggressively as they are and why they're accounting for such a high share of overall spending.

[Ed Elson]

Yeah, there's almost two parts to this story. One is the reliance and the dependence that our economy is leaning on rich people. The fact that basically half of the economic activity is rich people. But then there's another side to this, which is, as I said, we just saw this retail sales data and the data looks good, but there's this possibility that actually the data that we're hearing and we're getting from our government on the economy is kind of useless in a way in that it's only really or increasingly only reflecting the behaviors of rich people, which is only a small subset of the entire population. And so there's this other dynamic here where you have data coming in, but you can't really trust the data because how much of that is impacted by rich people? By the top 10% or as you say the top 3.3%. And I'm wondering if there are any other examples of economic data that you are seeing. Where the data comes out, we all go, oh, good, things look good, America's doing great. And then you dig in and you realize, no, it's actually, it's not America, it's wealthy America.

[Mark Zandi]

Oh yeah, this is a age old problem, right? In economics, I mean, you look at the averages and the means and the medians, like in the middle of the distribution you say, oh, no problem, everything's fine. Take the banking crisis back now, almost two and a half years ago, you, if you looked at capital ratios for the banking system or return on equity or profitability, you go, oh, no problem. But then you go look at the distribution and you look at the tails of the distribution, who's at one end and the other. You get a whole, you go, oh my gosh, you got a real problem. It's Silicon Valley bank or First Republic, same deal here. We're looking at the averages, the means, the medians, kind of the middle of the distribution, but the distribution's all skewed. So it's giving you not a picture that's not representative of the reality of what the world feels like for most Americans. And this goes perhaps to why many Americans, most Americans, I think, are feeling pretty punk about the economy. This isn't working for me. And you look at the average, you go, well, what's the problem? Everyone's got a job, but, well, this is the problem. Their spending hasn't been able to keep up or just barely kept up with the pace of inflation over the past five, six years.

[Ed Elson]

I'm wondering to what extent you think this should be affecting our central bank policy. I mean, when this episode as the Fed will be meeting later in the day and we're going to get most likely a rate cut, does this change your views at all? I mean, the idea that we're getting this positive retail data, we're getting signs that spending is increasing, but then it's actually only really just rich people who are increasing their spending. I'm wondering if your position on Fed policy might be changing at all as a result of these findings, or perhaps.

[Mark Zandi]

Not in the near term. I mean, I do think front and center for the Fed, as it should be, is the job market. The job market is flagging. There's been no effective job growth in recent months and that's even before we get all the revisions in which are almost certainly going to show that the economy's been losing jobs. Not Consistently, but for a number of months. So if you're in that kind of world where the job market has gone flat, I think you need to start addressing that, particularly in the context about the Fed, particularly in the context of Fed independence. Because if we go into recession, they're going to get blamed and it's going to be existential for their independence, which is already under tremendous pressure. So I think they need to ease and they need to ease fast. But you know, I don't think it's the Fed's job to fix this problem we have with the income and wealth distribution. That's, that's not, they don't have the tools to do that. Yeah, they have the tools to keep the economy moving forward in aggregate, but they can't address these, you know, broader equity distributional issues. That's a, that's in the purview of Congress and the administration. That goes to the tax code, that goes to government spending and who benefits, who doesn't benefit, those kinds of things.

[Ed Elson]

Yeah, just while we have you, do you have any predictions for this Fed meeting? I mean, 96% of Wall street would say 25 basis point cut, but you've also got the President saying it should be bigger than that.

[Mark Zandi]

Yeah, they'll cut, it's baked 25 basis point, a quarter point. I mean there has been some conversation around 50 basis points, a half a percentage point. I don't think we're going to get there, at least not this go around. I mean, I do think the preponderance of the members of the Fed believe that they should cut, but they need to be wary of inflation. It is picking up. Yeah, it should be temporary because the tariffs and once the tariffs stabilize, inflation should come back in. But that's a forecast and it's a pretty tenuous one in the context of pretty fragile inflation expectations. So need to be careful. So I think it's a quarter point, but the other thing is they got another meeting in six weeks and another one that's in October, another one in December. So if things don't get back on the rails here and the job market continues to weaken the economy more broadly, looks like it's going to flag. Then they can cut more aggressively. But at this point I suspect 25 basis points.

[Ed Elson]

All right, Mark, thank you very much. Really appreciate this and I will say that analysis was very eye opening for me. 50%, it's just unbelievable.

[Mark Zandi]

Yeah, I hear you.

[Ed Elson]

We appreciate your time.

[Mark Zandi]

Thanks, Ed.

[Ed Elson]

That was Mark Zandi, chief economist at Moody's Analytics. Bottom line, there are many stories that you can tell yourself about the economy right now, and there are many rosy stories you can tell yourself about the economy. We can look at the retail sales that we just saw, we can look at GDP growth, we can look at the stock market hitting all time highs, and we can say that the consumer is more resilient than ever, that spending is going up. And that is true, but for only a small subset of people. The reality that we must increasingly understand is that we live in a bifurcated economy where there are a handful of wealthy households that are spending, that are buying stocks, that are driving growth and pushing all of these numbers up. But behind that data there is a darker story happening, a story of the majority. And the story for many of those people is that they are simply trying to keep up. After the break, a look at Trump's newest Fed appointee. If you're enjoying the show, give Property Markets a follow.

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[Ed Elson]

We'Re back with property markets. The Senate has confirmed Stephen Myron, a White House economic advisor, as governor of the Federal Reserve. This is the first time in 90 years that a sitting White House official has served on the board of the Fed. Myron is currently set to serve only the remaining months of former Governor Adriana Coogler's term, which ends in January. He is currently taking part in this week's Fed meeting where the governors are voting on a potential rate cut. Okay, question who is Stephen Myron and how did this active White House official end up getting a job at the Federal Reserve? Well, let's Dig in. Let's review his story. Stephen. Myron's career really began in college, where he got his bachelor's in economics at Boston University. He then went on to to a PhD in economics at Harvard, where he studied under a former economic advisor to Reagan and one of the core architects of Reaganomics. After that, he took a job in finance, first at a small investment firm, then Fidelity, then a hedge fund called Sovanum. And it was at Savarnum where many of his political convictions really started to become clear, especially to his colleagues. In fact, so clear it apparently became a bit of a problem. His colleagues said they, quote, worried that Myron's investment decisions could be negatively influenced by his politics. This did eventually lead to a career in the public sector. During the pandemic, he got a position working as an advisor on pandemic relief programs. He later started writing opinion pieces for think tanks and investment firms. One of those pieces was entitled A User's Guide to Restructuring the Global Trading System. And. And that was important for two main reasons. One, it caught the attention of Trump's circle, which led to his appointment as one of his economic advisors. And two, it was almost an exact blueprint of Trump's tariff policy. This was really the moment that clarified Myron's economic agenda, and that was follow the leader, go with Trump. And now that he is in the White House, that agenda has only placed progressed. For example, he has long been holding the position that tariffs actually won't cause inflation. And just last month he doubled down on that position on cnbc.

[Narrator/Host on Stephen Myron Segment]

There's just still continues to be no evidence whatsoever of any tariff induced inflation. I think lots of folks who are expecting that, who are predicting doom and, you know, doom and gloom, it just hasn't panned out and it continues to not pan out for them.

[Ed Elson]

Just to note that isn't true. We are seeing tariff induced inflation. That is why inflation is rising. And it is specifically rising in goods that are most sensitive to tariffs. He also recently became one of Jerome Powell's greatest critics. He publicly disavowed Powell's interest rate decisions and he has also been publicly praising Trump's decisions. He said that Trump has made, quote, a series of excellent calls on monetary policy. But his most aggressive stances, and perhaps most consequential are his stances on the Fed itself. Specifically, he wants the executive branch to have more control over monetary policy, whether that is through shortening the Fed's term limits or putting state governors in charge of the Reserve banks, or through giving the president, quote, increased oversight on The Federal Reserve Board of Governors. The idea is really to place more political pressure on the Fed, which is of course, exactly what Trump wants to do. Now, does he believe this because he thinks it's actually good policy, or does he believe it because he wants to get into Trump's good graces? We can't know for sure, but one quote from a former colleague is quite striking. Quote Myron is a well meaning person who understands that his job requires some intellectual backflips and occasional public worship. Now, the final piece to note, and this is the most unusual piece, as we said, Stephen, Myron already has a position in the White House that is unusual. What is more unusual is that he actually isn't resigning from that position. The plan is to take what they're calling an unpaid leave, complete his term at the Fed, and then return to the White House. But crucially, he isn't actually giving up the position. He's still in that post. Put another way, the Fed's independence is at this point kind of compromised, not in a huge dramatic way, but the fact of the matter is the White House has now installed one of its own officials into the Fed. Now, the extent to which this individual will actually influence our monetary policy, that remains to be seen. But what probably matters more here is the precedent. This is the first time we've seen any such arrangement. But if this, combined with the attempted firing of Lisa Cook is any indication of what's to come, well, then you can only conclude this probably won't be the last. Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shalon, Isabela Kinsel, Kristen o' Donoghue and Mill Silverio. And our technical director is Drew Burrows. Thank you for listening to Profg Markets from Profgy Media. If you liked what you heard, give us a follow. I'm Ed Elson. I'll see you tomorrow.

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