Michael McIntyre
On Feb 11, 2008, at 11:37 AM, JBrown72073 at cs.com wrote:
> This article from Sunday's NY Times claims that the bottom fifth of
> households (by income) spend on average twice what they earn.
> Oddly, the authors don't include 'interest' as an expenditure
> category, but is this anywhere near right or does it just reflect a
> lot of underreporting of income when your income is fairly informal
> to begin with? Or is it just magnifying what it's reporting by
> ignoring assets? (This would help their argument that we're all
> fine and prosperous because we have AC and color TV's.)
>
> Their explanation seems unlikely and certainly unsustainable: That
> most families are just low-income temporarily and are using
> savings, selling their cars, homes, and cashing in their life
> insurance policies, or they're retirees using savings. Personal
> debt is not mentioned at all. Still, even with credit cards,
> borrowing against houses, student loans, this is quite a figure.
>
> Jenny Brown
>
>> "You Are What You Spend
>
> By W. MICHAEL COX and RICHARD ALM
> Published: February 10, 2008 (NYT)
>
> WITH markets swinging widely, the Federal Reserve slashing interest
> rates and the word “recession” on everybody’s lips, renewed
> attention is being given to the gap between the haves and have-nots
> in America. Most of this debate, however, is focused on the wrong
> measurement of financial well-being.
>
> It’s true that the share of national income going to the richest 20
> percent of households rose from 43.6 percent in 1975 to 49.6
> percent in 2006, the most recent year for which the Bureau of Labor
> Statistics has complete data. Meanwhile, families in the lowest
> fifth saw their piece of the pie fall from 4.3 percent to 3.3 percent.
>
> Income statistics, however, don’t tell the whole story of
> Americans’ living standards. Looking at a far more direct measure
> of American families’ economic status — household consumption —
> indicates that the gap between rich and poor is far less than most
> assume, and that the abstract, income-based way in which we measure
> the so-called poverty rate no longer applies to our society.
>
> The top fifth of American households earned an average of $149,963
> a year in 2006. As shown in the first accompanying chart, they
> spent $69,863 on food, clothing, shelter, utilities,
> transportation, health care and other categories of consumption.
> The rest of their income went largely to taxes and savings.
>
> The bottom fifth earned just $9,974, but spent nearly twice that —
> an average of $18,153 a year. How is that possible? A look at the
> far right-hand column of the consumption chart, labeled “financial
> flows,” shows why: those lower-income families have access to
> various sources of spending money that doesn’t fall under taxable
> income. These sources include portions of sales of property like
> homes and cars and securities that are not subject to capital gains
> taxes, insurance policies redeemed, or the drawing down of bank
> accounts. While some of these families are mired in poverty, many
> (the exact proportion is unclear) are headed by retirees and those
> temporarily between jobs, and thus their low income total doesn’t
> accurately reflect their long-term financial status."
>
> rest at: http://www.nytimes.com/2008/02/10/opinion/10cox.html
>
>
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk