The Middle Class Spending Crash Explained

Tuesday, December 2, 2014
By Paul Martin

by Tyler Durden
ZeroHedge.com
12/02/2014

With Black Friday sales plunging and Cyber Monday growth slowing, it appears the chicken of stagnant wages and debt-saturation are coming home to roost for a massacred middle-class America. However, as WSJ reports “we are buying less stuff,” because the basic costs of necessities such as healthcare, food eaten at home, rent, education, and cellphones have surged.

Consumer spending continues to make up just over two-thirds of the U.S. economy. But where households spend that money has shifted significantly.

To see how it has moved, the Journal analyzed Labor Department data on 2013 out-of-pocket spending for the middle 60% of the population by income—households earning between about $18,000 and $95,000 a year, before taxes.

The data show they are losing ground. Overall spending for the group rose by about 2.3% over the six-year period from 2007, even as inflation totaled about 12%. At the same time, income for the group stagnated, rising less than half a percent.

With health care and other costs rising, these consumers spent less on furniture, entertainment, clothing and even child care, the Journal analysis found.

“Part of the story is that your income growth is slowing,” said Steven Fazzari, an economist and chairman of the sociology department at Washington University in St. Louis. “They’re spending more on necessities, cutting back on other types.”

The Rest…HERE

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