As spending by wealthy weakens, so does economy

Discussion in 'Economy' started by Yurt, Aug 1, 2010.

  1. Yurt
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    Yurt Gold Member

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    As spending by wealthy weakens, so does economy

    WASHINGTON – Wealthy Americans aren't spending so freely anymore. And the rest of us are feeling the squeeze.

    The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery.

    The answer may not be clear for months. But their cutbacks help explain why the rebound could be stalling. The economy grew at just a 2.4 percent rate in the April-June quarter, the government said Friday, much slower than the 3.7 percent rate for the first quarter.

    Economists say overall consumer spending has slowed mainly because the richest 5 percent of Americans — those earning at least $207,000 — are buying less. They account for about 14 percent of total spending. These shoppers have retrenched as their investment values have sunk and home values have languished.

    In addition, the most sweeping tax cuts in a generation are due to expire in January, and lawmakers are divided over whether the government can afford to make any of them permanent as the federal budget deficit continues to balloon. President Barack Obama wants to allow the top rates to increase next year for individuals making more than $200,000 and couples making more than $250,000. The wealthy may be keeping some money on the sidelines due to uncertainty over whether or not they will soon face higher taxes.

    The Standard & Poor's 500 stock index has tumbled 9.5 percent since its high-water mark in late April. Home values fell 3.2 percent in the first quarter, according to the Standard & Poor's/Case-Shiller 20-city home price index.

    Think of the wealthy as the main engine of the economy: When they buy more, the economy hums. When they cut back, it sputters. The rest of us mainly go along for the ride.

    http://news.yahoo.com/s/ap/20100801/...althy_cut_back

    explain to me again how taxing the wealthy more helps the economy....
     
  2. Gremlin-USA
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    Gremlin-USA <<< Me in 1970

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    Do not worry someone will try to spin this and they might even say raising taxes an extra 20% will help get us out of this recession faster :cuckoo:

    .
     
  3. william the wie
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    william the wie Gold Member

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    Well what is trying to be accomplished? Most of what I am hearing about tax policy doesn't even make good nonsense.
     
  4. Samson
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    Samson Póg Mo Thóin Supporting Member

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    We haven't seen spending decline yet: Wait until summer ends, everyone goes back to school, and the census workers lose their jobs.

    Yep, gonna be an interestin' November.
     
  5. Truthmatters
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    Truthmatters BANNED

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    more proof they own our assses
     
  6. Ravi
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    Ravi Diamond Member

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    This article is incorrect. 5% of American citizens do not spend more than the remaining 95%. The conclusion in the headline is misleading if not an out and out lie.

    But here's a tissue for the woman that is so unpatriotic that she's stopped buying frocks and started hording.
     
  7. CrusaderFrank
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    CrusaderFrank Diamond Member

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    The wealthy need to be better regulated, we don't have enough government regulations mandating how much people must spend

    Bush deregulated the wealthy
     
  8. Samson
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    Samson Póg Mo Thóin Supporting Member

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    You'd think if they owned your ass, they'd be kind enough to remove your head from it.
     

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