Top 10% of American Households: Driving Force Behind Half of U.S. Consumer Spending
According to a recent analysis by Moody’s Analytics, the top 10% of American households in terms of income earned are responsible for nearly half of all consumer spending in the United States. This trend, which has been on the rise in the past few decades, raises important questions about economic inequality and its impact on the broader economy.
A Shift in Consumer Spending Power
The income and spending patterns of the top 10% of American households have undergone significant changes in the past few decades. According to the Economic Policy Institute, the top 10% of income earners in the U.S. saw their income grow by 75% between 1979 and 2007, while the bottom 90% experienced only a 14% increase. This income growth has translated into increased spending power, allowing the top 10% to account for a larger share of total consumer spending.
Implications for the Economy
The concentration of consumer spending among the top 10% of American households has significant implications for the economy as a whole. On the one hand, it can lead to increased economic growth and job creation, as businesses cater to the demands of high-income consumers. On the other hand, it can also exacerbate economic inequality and reduce overall consumer spending growth.
Impact on Individuals
For individuals outside of the top 10%, the trend towards increased concentration of consumer spending among high-income households can have a number of negative effects. For example, it can lead to higher prices for goods and services as businesses focus on catering to the demands of high-income consumers. It can also lead to a reduction in the availability of certain goods and services, as businesses shift their production towards high-margin items that appeal to the wealthy.
Impact on the World
The trend towards increased concentration of consumer spending among high-income households in the U.S. also has implications for the global economy. As American consumers continue to drive a significant portion of global demand, the impact of their spending patterns can be felt far beyond U.S. borders. For example, countries that export luxury goods and services to the U.S. may benefit from this trend, while those that produce and export goods and services that are less appealing to high-income consumers may experience reduced demand.
Conclusion
The trend towards increased concentration of consumer spending among the top 10% of American households is a complex issue with significant implications for both the U.S. economy and the world at large. While it can lead to increased economic growth and job creation, it can also exacerbate economic inequality and reduce overall consumer spending growth. As policymakers and businesses grapple with this trend, it will be important to consider both the opportunities and challenges it presents.
- Top 10% of American households account for nearly half of all consumer spending
- Income growth among top 10% has far outpaced growth among bottom 90%
- Implications for economic growth, job creation, and economic inequality
- Impact on individuals and businesses in the U.S. and abroad
