Tags: Wealthy | recovery | stalled | Economy

Wealthy May Hold Key to Reviving Stalled Economy

By    |   Monday, 16 Aug 2010 12:50 PM

It will be difficult for the economy to rebound strongly without a lot of help from the wealthy.

The richest 5 percent of Americans, as measured by income, are responsible for 37 percent of consumer spending, according to data from Moody’s Analytics, The Wall Street Journal reports.

With consumer spending accounting for about 70 percent of economic activity, that gives the rich a major say in the direction of our economy.

And that influence has risen for at least 20 years. In 1990, the top 5 percent accounted for 25 percent of consumer spending.

That figure rose steadily for years, but dipped in 2008 during the financial crisis before jumping back higher in synch with the stock market rebound last year.

Once the stock market started soaring, the wealthy stopped worrying about the financial crisis and loosened their purse strings, says Mark Zandi, chief economist for Moody’s Analytics.

“I think that pent-up demand was unleashed,” he told the Journal.

But Zandi is concerned about the trend. “I don’t think it’s healthy for the economy to be so dependent on the top 2 percent of the income distribution,” he said.

Renowned economist Arthur Laffer says the key role of the wealthy in generating economic activity justifies tax cuts for them.

“Tax cuts on the poor cost you lots of money. Tax cuts on the rich pay for themselves. Rich people can afford lawyers, accountants, and can defer income,” he told Bloomberg.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
It will be difficult for the economy to rebound strongly without a lot of help from the wealthy. The richest 5 percent of Americans, as measured by income, are responsible for 37 percent of consumer spending, according to data from Moody s Analytics, The Wall Street...
Wealthy,recovery,stalled,Economy
240
2010-50-16
Monday, 16 Aug 2010 12:50 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved