The Rich Catch Everyone Else’s Cutback Fever - NYTimes.com.
The American consumer accounts for an estimated 60 percent of the country’s economic activity.
But the Top 5 percent in income earners — those households earning $210,000 or more — account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody’s Analytics.
That means the purchasing decisions of the rich have an outsize effect on economic data. According to Gallup, spending by upper-income consumers — defined as those earning $90,000 or more — surged to an average of $145 a day in May, up 33 percent from a year earlier. Then in June, that daily average slid to $119. ...
Would you like to imagine how much more stable our economy might be if it was less dependent on the spending mood of 5% of us? We would not be so dependent on their demand for luxury goods and perhaps more of us closer to the bottom of the income spectrum -- including those with young children -- could meet more of our needs.
What would it take to increase wages for those who work full-time? What would it take to create more jobs, to have jobs chasing workers, driving wages up, instead of workers competing for jobs, which drives wages down? What would it take for us to live up to our ideals?
Regular readers of this blog probably know the answer. It starts with shifting our taxation off productive activity, and onto that which is created socially and by nature.
The American consumer accounts for an estimated 60 percent of the country’s economic activity.
But the Top 5 percent in income earners — those households earning $210,000 or more — account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody’s Analytics.
That means the purchasing decisions of the rich have an outsize effect on economic data. According to Gallup, spending by upper-income consumers — defined as those earning $90,000 or more — surged to an average of $145 a day in May, up 33 percent from a year earlier. Then in June, that daily average slid to $119. ...
After virtually shutting down during the financial collapse in late 2008, the wealthy began to open their wallets wider last year, in part because a stock market rally helped them feel better off financially.
By spring of last year, the savings rate — which represents the percentage of after-tax income not spent — of the top 5 percent of income earners had turned negative, according to the analysis by Moody’s Analytics. That meant the group was spending more than it made.
Less well-off consumers remained more frugal, most likely constrained by unemployment, declines in home values and the disappearance of easy credit. So the savings rate actually rose last year for those in middle-income brackets as they cut spending.
Would you like to imagine how much more stable our economy might be if it was less dependent on the spending mood of 5% of us? We would not be so dependent on their demand for luxury goods and perhaps more of us closer to the bottom of the income spectrum -- including those with young children -- could meet more of our needs.
What would it take to increase wages for those who work full-time? What would it take to create more jobs, to have jobs chasing workers, driving wages up, instead of workers competing for jobs, which drives wages down? What would it take for us to live up to our ideals?
Regular readers of this blog probably know the answer. It starts with shifting our taxation off productive activity, and onto that which is created socially and by nature.
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