When The Rich Suffer, So Do You
Take note all you player-haters. When the rich suffer— so do you. At least that’s the argument put forth in an Associated Press piece yesterday. AP’s Mark Jewell wrote:
It may have taken longer and it may not be as acute, but there are early hints that the economic slump is crimping the lifestyles of the wealthy.
They are investing more conservatively, spending less on luxury goods and are being more thrifty with their credit cards. Many are asking their personal shoppers and private-jet travel providers to seek the best deals rather than over-the-top extravagances.
That news may produce a shrug from many people who have lost their jobs or homes in this economy. The problem is that when the wealthy get stingy, it trickles down to the rest of us.
Jewell went on to explain how a pullback in spending by rich Americans tends to affect Main Street. He wrote:
The 10 percent of households with the highest incomes account for nearly a quarter of all spending, according to data compiled by research firm Moody’s Economy.com from a 2006 federal survey…
Other government data show households in the top one-fifth of the U.S. population ranked by income earn about half of all total personal income before taxes — an imbalance that gives the wealthy immense economic clout, said Sara Johnson, an economist at the research firm Global Insight.
“Consumer spending makes up 70 percent of gross domestic product, and when one group accounts for a very substantial share of consumer spending, they also account for a large share of the economic activity that creates jobs,” Johnson said.
The outlook for spending by wealthy Americans doesn’t look too good. Jewell noted:
Unity Marketing, a Stevens, Pa.-based firm whose clients include retailers in the more than $322 billion U.S. luxury goods market, said its latest poll of affluent people nationwide found a 20 percent decline in spending on luxury goods in this year’s second quarter, and the lowest luxury consumer confidence level in the nearly five years the survey has been conducted.
Just over half of the 1,024 respondents earning an average income of $204,800 predicted they would spend less on luxury in the coming 12 months than they did a year ago.
Sometimes, it just doesn’t pay to hate the players. Really.
Source:
“Rich begin feeling the pain in down economy”
Mark Jewell
Associated Press, August 3, 2008
August 5th, 2008 at 3:12 pm
“The problem is that when the wealthy get stingy, it trickles down to the rest of us.”
—————–
Absolutely! Let’s stimulate our withering economy by giving the rich folks yet another tax break, so that it will trickle down to the level of us ordinary peons.
August 6th, 2008 at 9:06 am
Thanks for the comment Mammoth.