Here's a look at one hint as to why:
Who cares how the rich spend their money?
Well, perhaps everyone should these days. Consumer spending accounts for roughly two-thirds of U.S. gross domestic product, or the value of all goods and services produced in the nation. And spending by the rich now accounts for the largest share of consumer outlays in at least 20 years.According to new research from Moody’s Analytics, the top 5% of Americans by income account for 37% of all consumer outlays. Outlays include consumer spending, interest payments on installment debt and transfer payments.
By contrast, the bottom 80% by income account for 39.5% of all consumer outlays.
It is no surprise, of course, that the rich spend so much, since they earn a disproportionate share of income. According to economists Emmanuel Saez and Thomas Piketty, the top 10% of earners captured about half of all income as of 2007.
So, we have an economy that is largely based on...buying stuff. Or, rather, it's largely based on rich people buying stuff. So when rich people aren't buying as much stuff as they used to, the economy falters.
Of course, commenters on this WSJ blog piece point out that "the rich" apparently means anybody making about 200,000 dollars a year, and people right around the $200,000 mark insist that they're not rich, no sir, not at all, not compared to all the other people who count their annual income in the millions of dollars. And perhaps there's some truth to that--but whether they think of themselves as "rich" or not, people in this group are among that 5% on top who account for 37% of consumer spending.
The trouble with having so much of our economy based on consumer spending is that in times of economic stress (such as now), people naturally (sanely, logically) cut back on spending. Which, according to economists, only makes things worse--so get out there and max out your credit cards, because It's The American Way!
Like I said above, I'm thinking that we won't be fixing our economic situation anytime soon...