Household Consumption by Income Level

[Midpack]

The phenomena is no surprise at all, but I don't remember the least time I've seen it quantified-illustrated so starkly. From an article on a related topic.

https://www.gmo.com/America/CMSAtta...LWDZMh5AsRhjRbJeoHO+t5mvJyPQt78J5aFzJ7aMFzw==

 

[ERD50]

It is somewhat interesting (and maybe/maybe-not surprising?) that the lowest 20% of households can still afford to spend, on average, ~38% on discretionary items. Since that is average, some are probably spending far less, and some far more than that on discretionary.

That's not exactly living hand-to-mouth, which is what I think the media portrays sometimes? That would be near 0% discretionary, no?

And this probably actually understates the delta between high/low incomes. At first glance, the % differences didn't seem that extreme to me, but clearly, the 'essentials' that make up ~42% of a high income person will typically include much nicer 'food and shelter' than the low income group. I think the low income group would look at most of those 'essentials' as 'discretionary'.

Yes, it's interesting. Thanks for posting.

-ERD50 (who should take a break from posting/reading and do his taxes!)

 

[rodi]

I'm a little confused by their definition of essential (vs discretionary)

from the article

essentials such
as children’s education, medical expenses, and filial support, as well as to build a buffer against adverse life changes

By that definition, private school tuition and saving for a rainy day are considered essentials, not discretionary.