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Who cares how the rich spend their money?

Well, perhaps everyone should these days. Consumer spending accounts for roughly two-thirds of U.S. gross domestic product, or the value of all goods and services produced in the nation. And spending by the rich now accounts for the largest share of consumer outlays in at least 20 years.

What is surprising is just how much or our consumer economy is now dependent on the rich, and how that share has increased as the U.S. emerges from recession. In the third quarter of 1990, the top 5% accounted for 25% of consumer outlays. That held relatively steady until the mid-1990s, when it started inching up past 30%. It dipped in 2003 and again in 2008, but started surging in 2009 amid the greatest bull market rally in history, with the Dow Jones Industrial Average rising nearly 50% in the last nine months of the year.

 
tasches

Asked by tasches at 2:34 PM on Aug. 9, 2010 in Politics & Current Events

Level 48 (298,202 Credits)
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Answers (24)
  • @ Sisteract

    Right on right on!!!!! You are spot on.

    We have created a viscious cycle in this nations in regards to our economic stability.. We wanted to consume, and consume we did (and do). But we wanted to consume cheaply. In order for us to consume cheaply, products had to be made cheaply. So offshored and outsourced was the secret to manufacturing cheaply. Which gave us our cheap prices. But at the cost of living wage paying jobs, that gave us the luxury of having disposable income to spend. No those jobs have been replaces by low wage jobs, and people don't even have the disposable income to spend on cheap things now. So, the economy is faltering, at best it will become stagnent (which hourly wages for a typical wage earner have been stagnent for over a decade now).


    Low wages. Stagnent ecomony. The new American norm. And will be for awhile to come. Unless some drastic policy changes start happening.
    pixie_trix

    Answer by pixie_trix at 3:12 PM on Aug. 9, 2010

  • I agree it IS very lopsided, but in this country, there are so many opportunities for one to further their education, move up the business ladder to higher salaries, develop their entrepreneurial skills, and learn how to save and invest their money wisely.

    MANY of today's wealthy started with nothing. They built their fortunes. And now it seems that everyone feels entitled to said fortunes. I agree that this is an unsustainable reality. And if you think it's bad now, just wait until January when Bush's tax cuts expire!!
    LoriKeet

    Answer by LoriKeet at 2:41 PM on Aug. 9, 2010

  • But our consumption is of all the wrong things. It's a vicious cycle, so many have limited to dollars, so they are stuck purchasing the cheap foreign made crap that places like WM push and that action perpetuates the cycle. The crap is cheap and needs to be replaced, all of the time, and the consumer still has no money or job(WM sent it to China), so the American buys more. There's going to be hell to pay when Americans can no longer purchase the cheap crap-and it's coming. I will not touch the dietary issues.

    Sisteract

    Answer by Sisteract at 2:58 PM on Aug. 9, 2010

  • Yep. We are among these folks. We sold 1 of our homes and have decided to just rent for awhile (we still own another home). It's a wait and see game for many of us.

    Few folks retain wealth without spending wisely.
    Sisteract

    Answer by Sisteract at 2:40 PM on Aug. 9, 2010

  • Our economy is dependent on consumption (retails sales, the buying/selling of goods & services).

    If the rich quit spending, like many average hourly workers have, the economy would be even worse off than it is.
    Until America's average hourly wage earners, have enough disposable income to spend again (which isn't going to be happening anytime soon) then our economy needs rich people spending what they have to spend.The only way out of this horrid cycle. Is for the American economy to change from a consumption based economy to something else. Otherwise, the cycle of no one spending money, and in turn the economy being stagnent or slow will continue Once upon a time, our nation had an agriculture based economy. Things tanked. We worked, changed and became a manufacturing based economy. Then things changed, mainly for business reasons, and now we have a consumption based economy. Time to change once again. But how is the ?.
    pixie_trix

    Answer by pixie_trix at 2:41 PM on Aug. 9, 2010

  • They give a lot of it away. Trust me.......
    sherribeare

    Answer by sherribeare at 2:46 PM on Aug. 9, 2010

  • 1. Our country produces nothing. Until we are actually manufacturing something there is no real money to "make", it just sort of get's recycled.

    2. This is what happens when you make and then encourage the population to be on some sort of subsistence.

    Let's get people off the govt dole by starting to manufacture things ourselves.
    yourspecialkid

    Answer by yourspecialkid at 4:06 PM on Aug. 9, 2010

  • The more peole vote for higher taxes the less we'll spend. And the less jobs we will be able to create....... They just don't think ahead when voting. They just see short term of redistributing the wealth. ugh
    thelowlander

    Answer by thelowlander at 5:59 PM on Aug. 9, 2010

  • Good points.
    urkiddingright

    Answer by urkiddingright at 2:35 PM on Aug. 9, 2010

  • PIxie..........I couldn't have put it better myself. VERY TRUE
    sherribeare

    Answer by sherribeare at 2:47 PM on Aug. 9, 2010

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