Yurt
Gold Member
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....
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....
