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The Rich Have Stopped Spending And That Has Tanked The Economy


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2020 Jun 17, 10:18am   876 views  19 comments

by RWSGFY   ➕follow (4)   💰tip   ignore  

The wealthiest American households are keeping a tight grip on their purse strings even as their lower-income counterparts are spending a lot more freely when they emerge from weeks of lockdown. That decline in spending by the wealthy could limit the whole country's economic recovery.
Researchers based at Harvard have been tracking spending patterns using credit card data. They found that people at the bottom of the income ladder are now spending nearly as much as they did before the coronavirus pandemic.
"When the stimulus checks went out, you see that spending by lower-income households went up a lot," said Nathan Hendren, a Harvard economist and co-founder of the Opportunity Insights research team.
However, the wealthy are not matching them. "For higher-income individuals, that spending is still way far off from where it was prior to COVID and it has not recovered as much," Hendren said.
That's potentially crippling because consumer spending is a huge driver of economic activity. In fact, so much of the country's economy depends on shopping by the top income bracket that the wealthiest 25% of Americans account for fully two-thirds of the total decline in spending since January.


https://apple.news/Abrnvyhk4Th2470agRRVJ1g

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1   Onvacation   2020 Jun 17, 10:24am  

FuckCCP89 says
"For higher-income individuals, that spending is still way far off from where it was prior to COVID and it has not recovered as much,"

Open the restaurants, resorts, movie theatres, travel without quarantine, and sporting events. We'll spend money.
2   🎂 Tenpoundbass   2020 Jun 17, 10:33am  

This only matters for those employed in the Luxury Yacht building.

Job demands are going to be there, and unless we want more monopolies they need to be forced out by economic policy where our Government will loan money to a small entrepreneur start up. Rather than giving it all to the same few well heeled connected Monopoly players.
3   RWSGFY   2020 Jun 17, 10:41am  

Tenpoundbass says
This only matters for those employed in the Luxury Yacht building.


Um, no:

"The wealthy aren't holding back because they don't have the money. By and large, they have lost fewer jobs and aren't the ones who are worried about making rent.

They have a lot of discretionary income and before the pandemic were spending a significant chunk of that going to nice restaurants, the theater, or traveling and staying in nice hotels. Those are precisely the things that have been off-limits since the coronavirus hit.

That makes this very different from an ordinary recession, when spending on higher-touch services doesn't dry up so quickly. And those experiences are usually a lot more expensive than food and other essential items, which the rich and poor alike have continued to spend on, but also make up a smaller portion of upper-income household budgets.

Hendren and his colleagues found that businesses that deliver in-person services in wealthy neighborhoods have seen the biggest drop in sales and are struggling to recover, while a retail store or takeout restaurant in a poorer neighborhood might have seen some decline but is starting to come back now.
...

Hendren's team found big job losses specifically among workers, many of whom don't make a lot of money but who worked in high-income neighborhoods. "
4   🎂 Tenpoundbass   2020 Jun 17, 10:47am  

FuckCCP89 says
They have a lot of discretionary income and before the pandemic were spending a significant chunk of that going to nice restaurants, the theater, or traveling and staying in nice hotels. Those are precisely the things that have been off-limits since the coronavirus hit.


Excelent you should welcome the impending affordable vacations, with excelent amenities.

What part of it's always a good thing when idiots with more money than brains, aren't setting the going prices for living?

Goods will still have to move. Perhaps a return to the economic philosophy under Reagan where Companies would have rather sold a few million loaves of bread 50 cents, than only a few hundred at $4.99.

The Luxury idiots are the same fuck sticks that has set the entry level model of cars at $25K, it's always a good fucking day when they take their marbles and go the fuck home.

Get ready for $25K Range Rovers and Mercedes. $12K Jap cars.
5   HeadSet   2020 Jun 17, 11:32am  

Get ready for $25K Range Rovers and Mercedes. $12K Jap cars.

Interesting to see if that really happens. I presume the "Jap cars" you mean cars other than the currently bottom priced Versa or Kicks.
6   WookieMan   2020 Jun 17, 12:05pm  

I don't know if I consider myself rich, but we've slashed spending. Still have income and our checking account is growing like a mother fucker. There's nothing to do here in IL. The biggest problem is that I now see how much we were spending on BS. I think a lot of people are noticing and a bounce back in the economy may be more difficult. Hopefully I'm wrong, because I could give a shit who is POTUS, it sucks see people suffer and in bad places.

We need to just open up with no restriction and just deal with the consequences. Far more will be hurt by this shit than those that die.
7   Shaman   2020 Jun 17, 12:10pm  

A friend is a psychologist and says she’s seeing a ton of clients lately, mostly for depression and mental health issues derived from the Covid lockdown.
Survey conducted recently found that only 33% of Americans considered themselves to be “happy,” the lowest result for that ever recorded.
Suicide rates are at epic levels.
Riots in the streets for any and no reason.
And the media, after a few weeks of taking a break from it to fawn over protestors, are back hard at work trying to scare us about Covid-19.

Gee, I wonder what the problem is?

Fuck the virus!
Fuck your lockdowns!
Wear a mask if you wish, but don’t tell me what to do!
Reopen America fully!
8   joshuatrio   2020 Jun 17, 1:05pm  

Couple of thoughts:

I think travel will go insane once everything gets lifted. People are wanting to get the hell out of their homes and have nothing to do. Our summer and fall plans have all been put on hold with cruise lines not running.

Our home businesses have actually done well though. One of our web based sites did well, while our physical product company took a hit.

I've continued to receive job offers over the last month, as I've been looking for a new gig. Salaries haven't been affected much and remote work is more widely available than ever before.

However, if they keep this shit up, I can see it taking a long time to recover as more and more people get laid off.
9   RWSGFY   2020 Jun 17, 2:39pm  

TrumpingTits says
saying high-income ppl who still allocate their money more for consumption than investing are 'rich' is a mis-labeling snafu.


This is NPR. They explicitly put top 25% into the "rich" category.
10   BayArea   2020 Jun 17, 2:53pm  

“Tanked the economy” ?

Where??
11   AD   2020 Jun 17, 3:10pm  

.TrumpingTits says
Rich do not prop up the economy via spending (creating more consumption). They do so by investing money instead (creating more production).


Very true.

The rich might buy a new vacation home in Malibu or a new superyacht thereby employing the architects, construction workers, etc, however a vast majority of their financial contribution to the economy is through investing.

A lot of the rich invest some of their money in private equity or angel investor firms to fund startup companies.

.
12   🎂 Tenpoundbass   2020 Jun 17, 4:45pm  

HeadSet says
Interesting to see if that really happens. I presume the "Jap cars" you mean cars other than the currently bottom priced Versa or Kicks.


I'm not saying they'll be offering cars with the touring and tech package, that is pretty much standard now even for the econo sedan range. Every car today has been a Mercedes analog. Really the only thing that distinguishes one brand and model from the other is the badge and branding.
Then to get something like a Mazda 3 without all of the features, is a barebones piece of shit. They intentionally make the most essential modern features part of an upgrade that you can't get alone. I think we'll be seeing more options like a car with smart phone connectivity and navigation, with window cranks and manual seats. While adding only $3K to the 13K base price. Base prices have been set unrealistically high and limited in features, to get the consumer to justify spending the extra $5 or $6K for the Sport model. Which still is lacking all of the tech and leather features.
13   Jimbo in SF   2020 Jun 17, 6:41pm  

I spent about $40k a year on my credit card for business travel, that's down $0 right now.
14   FortWayneAsNancyPelosiHaircut   2020 Jun 17, 6:46pm  

I've been not spending too, you never know where this corona shit will take us with fucking lock downs. Fucking assholes let protesters go hog wild, but everyone else is locked up. Man, I will fucking riot if they don't fully open up by July, at that point it'll be white people throwring rocks at government buildings.
15   BayArea   2020 Jun 17, 6:49pm  

If the middle class knew how the ultra rich operate, they’d be out in the streets with pitchforks.
16   SunnyvaleCA   2020 Jun 17, 7:04pm  

So far during the cower-in-place, I've replaced my hot water heater, washing machine, and drier. It's great not having to take a day off from work to wait around for delivery.

I bought a new car in 2009 that was heavily discounted due to the financial crash. It's still working fine, so I doubt I'll be tempted this time around.
17   just_passing_through   2020 Jun 17, 8:26pm  

FuckCCP89 says
For higher-income individuals, that spending is still way far off from where it was prior to COVID and it has not recovered as much


Beyond rent and related I'm just buying food, kitchen equipment and shit for my fish tank. Last time I filled up gas was early March and I still have 1/2 a tank.
18   HeadSet   2020 Jun 18, 7:26am  

FuckCCP89 says
TrumpingTits says
saying high-income ppl who still allocate their money more for consumption than investing are 'rich' is a mis-labeling snafu.


This is NPR. They explicitly put top 25% into the "rich" category.


To 25% is "rich?" If we are talking about income, that would mean anyone earning over $100k/year is rich. It appears that Patnet is inundated with rich people.
19   RWSGFY   2020 Jun 18, 7:30am  

HeadSet says
To 25% is "rich?" If we are talking about income, that would mean anyone earning over $100k/year is rich. It appears that Patnet is inundated with rich people.


Isn't it what Obama defined as "rich" too?

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