Newspaper article THE JOURNAL RECORD

Report: Only Higher-Income Consumer Spending on Rise

Newspaper article THE JOURNAL RECORD

Report: Only Higher-Income Consumer Spending on Rise

Article excerpt

Consumer spending by middle-income households stagnated from 2000- 2005, with spending by lower-income Americans declining, according to an analysis by two economic policy organizations.

Only consumer purchases by higher-income households increased over the reviewed period, says the report by the Center on Budget and Policy Priorities and the Economic Policy Institute.

Jared Bernstein of EPI and Jason Furman of the CBPP analyzed U.S. Department of Labor data for 2005 to compile the report.

Bernstein is EPI senior economist and Furman is a senior fellow at CBPP.

Adjusted for inflation, they found, households in all income categories saw their average before-tax incomes decline during 2000- 2005.

However, Bernstein and Furman determined that high-income families were able to increase their consumption spending due to the benefits of tax cuts, dipping into savings and borrowing.

"The top fifth of households made 39 percent of all consumer expenditures in 2005, the highest share on record," the analysis states. "The bottom fifth of households made just 8 percent of all expenditures in 2005, a tie with 2004 for the lowest share on record."

According to the study, from 2005-2005, the lowest-income fifth of households saw a 1.2-percent drop in consumer spending, with the middle 20 percent falling 0.1 percent. Among the highest fifth, the report found, spending grew 1.2 percent.

"Between 2000 and 2005, the share of total consumer expenditures made by the top fifth of households went up by a larger amount than in any other five-year period on record," the EPI/CBPP study found. …

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