Rich Americans' pullback in spending is hurting the economic recovery

[JonLP24]

Since the coronavirus pandemic unfolded, many Americans have cut their spending. But those earning the highest incomes have curbed their purchases the most, according to a new report, even though they were less likely to have lost their jobs or incomes.

But the frugality from the highest earners could jeopardize the speed of the U.S. economy’s recovery, experts warned, because many lower income jobs depend on that spending.

In mid-April when consumer spending reached its bottom, the top quartile of earners reduced their spending by 36%, while low-earners shrunk theirs by just 21%, a new paper by the Harvard-based Opportunity Insights group found.

By mid-June, over half the spending decline in the U.S. since January was due to the pullback from high-income households. Low-income households accounted for only 5% of the decline, the report found.

https://money.yahoo.com/amphtml/rich-americans-pullback-in-spending-is-hurting-the-economic-recovery-124949092.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlYXBpcy5jb20vYXV0aC9jaHJvbWUtY29udGVudC1zdWdnZXN0aW9ucw&guce_referrer_sig=AQAAADC76bbVu2PX4Xk4bmQT4zsaHJTn-nX0bQjLQcxzNNBQKkfUXJfU_qOwaR2rDcIU79-pSt1RIJ2gi1XptbVc2iBrnsOKcPor17k7q0gCcCGARGMb68yRLRgZ1HC8ttDPgeeYSrduJBOcsFN2yUx9Np4piEUaBBD66udQYX1lHNCL

[exboyfil]

1. Poor people still have to eat and pay rent

They don't have much to spend on discretionary items. I'm at about twice our median income, and I don't spend money on books or travel anymore (used to take 8 or so weekend trips and two longer vacations a year).

[spinbaby]

5. Exactly

Poor people are still buying food and necessities because they can’t cut back on that. It’s much easier to cut out a trip to Bali.

I’m fairly middle class and economically unaffected because I’m retired. My spending has gone down drastically, not because I’m cutting back, but simply because I’m not out doing things anymore. I didn’t take that road trip to see my sister, I didn’t buy new clothes this spring because there’s nowhere to wear them, I’m not going out to eat with my friends, etc.

[Aussie105]

2. In uncertain times

it is not unusual to cut your spending.

Discretionary spending that is, as above, people still need to eat and house themselves.

It's global, people are hanging onto their money, and providers of non-essential goods and services are hurting.
And they aren't liking it.

We, in South Australia, have a 'spend, spend!' campaign going on. Go do some travel within the state, it's safe! Stay overnight somewhere, order food, buy local touristy type stuff! etc.

[captain queeg]

3. Maybe we need to do another round of tax cuts.

[JustAnotherGen]

7. Another round of stimulus spending

We didn't receive the money - and we shouldn't have.

What was given to the working poor to upper middle class was not enough.

I don't need a tax cut - I need to see Americans Fed with a roof over their heads

[elias7]

4. Recovery?

This is still the first wave, not the second wave.

We’re not in recovery; we’re at the beginning stages of a pandemic

Don’t buy into “I’m done with this” Denialism, because science doesn’t work that way.

[JustAnotherGen]

6. Makes sense

We have a very high income, no kids, one parent to look after.

We canceled trips to New Orleans (mid april) and Scotland (September).
Dry cleaning - haven't needed it since March.
Gas - $58 a week to a month.
I-95 toll- $0
Dinner out - $0
Dinner Parties - $0
New Clothes - $0
Car Maintenance - $0
Broadway, Theater, Concerts, Movies - $0

Before the 301 tariffs hit in September 2018 - we purchased extra phones, duplicate small electronics, New water softener, etc etc

I manage regulatory compliance so I saw it coming.

Our uptick has been *survival* - making sure my mom is stocked up before this gets really really bad in the fall.