<p><a href=“http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1&oref=slogin[/url]”>http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1&oref=slogin</a> </p>
<p>Interesting commentary on what people spend their money on, and what it says about differing levels of income by household in the American economy.</p>
<p>The guy who wrote this is out to lunch. The numbers don’t compute. Whatever happened to people understanding arithmetic?</p>
<p>"The top fifth of American households earned an average of $149,963 a year in 2006. As shown in the first accompanying chart, they spent $69,863 on food, clothing, shelter, utilities, transportation, health care and other categories of consumption. The rest of their income went largely to taxes and savings.</p>
<p>The bottom fifth earned just $9,974, but spent nearly twice that — an average of $18,153 a year. How is that possible? A look at the far right-hand column of the consumption chart, labeled “financial flows,” shows why: those lower-income families have access to various sources of spending money that doesn’t fall under taxable income. These sources include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts. While some of these families are mired in poverty, many (the exact proportion is unclear) are headed by retirees and those temporarily between jobs, and thus their low income total doesn’t accurately reflect their long-term financial status. </p>
<p>So, bearing this in mind, if we compare the incomes of the top and bottom fifths, we see a ratio of 15 to 1. If we turn to consumption, the gap declines to around 4 to 1. A similar narrowing takes place throughout all levels of income distribution. The middle 20 percent of families had incomes more than four times the bottom fifth. Yet their edge in consumption fell to about 2 to 1. </p>
<p>Let’s take the adjustments one step further. Richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. If we look at consumption per person, the difference between the richest and poorest households falls to just 2.1 to 1. The average person in the middle fifth consumes just 29 percent more than someone living in a bottom-fifth household."</p>
<p>from the above…</p>
<p>“those lower-income families have access to various sources of spending money that doesn’t fall under taxable income. These sources include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts. While some of these families are mired in poverty, many (the exact proportion is unclear) are headed by retirees and those temporarily between jobs, and thus their low income total doesn’t accurately reflect their long-term financial status.”</p>
<p>Their short term financial status is bleak and in the long term we are all dead.</p>
<p>Income and wealth are being accumulated at the top and all the explanations why this isn’t really happening or why this doesn’t matter are BS.</p>
<p>I hope my kids, after graduating from college, never fall to this kind of reasoning. If they do, I know they need more education.</p>