The Economy Is Not Average People

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Socio economic stratification in the United States continues to be a major issue. If you simply read headlines, you’d think that the economy — i.e., spending by “average” consumers is on a positive, upward trend:

Thanksgiving Day saw an 18% increase in online spending to $479 million.

U.S. consumers have spent $12.7 billion already in the first 25 days of the November to December 2011 holiday season, up 15% from the corresponding days last year.

This sounds good, until you factor in the massive income gap and realize that the average consumer is somewhat divorced from the economy at large:

When discussing “the consumer,” it is important to remember that in reality, “the consumer” is the top 20% of income earners and then everybody else. The top 20% of income earners (who own about 80-90% of the equity market) account for about 40-45% of all spending in the economy.

via Business Insider and TechCrunch


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