USA - The Rich Have Stopped Spending

Arno Froese

Researchers based at Harvard have been tracking spending patterns using credit card data. They found that people at the bottom of the income ladder are now spending nearly as much as they did before the coronavirus pandemic. 

“When the stimulus checks went out, you see that spending by lower-income households went up a lot,” said Nathan Hendren, a Harvard economist and co-founder of the Opportunity Insights research team. 

However, the wealthy are not matching them. “For higher-income individuals, that spending is still way far off from where it was prior to COVID and it has not recovered as much,” Hendren said.

That’s potentially crippling because consumer spending is a huge driver of economic activity. In fact, so much of the country’s economy depends on shopping by the top income bracket that the wealthiest 25% of Americans account for fully two-thirds of the total decline in spending since January.

Hendren and his colleagues found that businesses that deliver in-person services in wealthy neighborhoods have seen the biggest drop in sales and are struggling to recover, while a retail store or takeout restaurant in a poorer neighborhood might have seen some decline but is starting to come back now. 

It spells trouble for the people who work in those nice restaurants or other service-oriented businesses. Hendren’s team found big job losses specifically among workers, many of whom don’t make a lot of money but who worked in high-income neighborhoods.

“There are going to be an awful lot of unemployed people for some time,” Federal Reserve Chairman Jerome Powell cautioned., 17 June 2020

Arno's commentary

Here the old saying is applicable: “The rich get richer, the poor get poorer.” Not surprisingly, the CIA Factbook reports that the lowest 10% income segment in the US consumes only 2%, while the highest 10% consumes 30%. Here the words of James 2:6 are applicable: “But ye have despised the poor. Do not rich men oppress you, and draw you before the judgment seats?”

Arno Froese is the executive director of Midnight Call Ministries and editor-in-chief of the acclaimed prophetic magazines Midnight Call and News From Israel. He has authored a number of well-received books, and has sponsored many prophecy conferences in the U.S., Canada, and Israel. His extensive travels have contributed to his keen insight into Bible prophecy, as he sees it from an international perspective.

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