Recall that 70% of the US economy depends on consumer spending. So if the economy is to function well, Americans need to spend enough money to buy most of the goods and services they’re capable of producing.
But incomes haven’t nearly kept pace with productivity. Over the past 40 years, most people’s wages have basically stagnated, while worker productivity has soared.
He might even believe this. But it’s not one of those things which actually matters.
The equation is Y = C + I + G + (X-M).
Sure, the C is consumption and is around 70%. G is government consumption (no, not transfers) at 17/18%. Net exports are a drag on the US economy (maybe 5%). The balancing item is business investment at 18% or so.
Given the absence of Scrooge McDuck I does equal S over time. So, Richer Americans save, that gets invested, business investment increases. And our problem here is what?