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News Link • Economy - Economics USA

Gallup Poll Shows Discretionary Spending at All Time Low

Gallup modeling suggests that lower- and middle-income spending is significantly more sensitive to job market conditions than is upper-income spending. In this regard, the September decline in lower- and middle-income spending may reflect the sharp increase in unemployment over the same period and continued high underemployment levels. Further, the lagged effects of continuing high and increasing unemployment are probably yet to be fully felt. On the other hand, upper-income spending tends to be more responsive to the "wealth effects" associated with higher stock and commodities prices. Although upper-income spending hasn't been increasing in response to the best September on Wall Street in 71 years -- at least to this point -- upper-income Americans have maintained their spending, while that of other Americans has declined.

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