Two-fifths of Households Spend More than They Make

September 30th, 2012
in econ_news, syndication

Econintersect:  The Bureau of Labor Statistics (BLS) released the results of shackSMALLtheir Consumer Expenditure Survey this past week, dated September 2012.  A rather astounding result was that the lower two quintiles (lowest 40%) of all households spent more than they had in after-tax income.

The average in the bottom quintile spent $2,244 more on food and housing than their total income.  The next 20% on average spent all but $293  of their annual income on food, housing and transportation.  Econintersect graphics follow the Read more break.

Follow up:

household-income-expense-2012-sept

household-income-minus-expense-2012-sept

It may be that some of these were retiree households who were living off savings.  This has been suggested by the Huffington Post in the following discussion of the bottom 20%:

The bottom fifth of the U.S. income distribution -- 24.4 million households -- on average earned $10,074 in after-tax annual income and spent $22,001 last year, according to the Labor Department.

This percentage of households includes many retirees, who are presumably living off savings.

Econintersect thinks this is too dismissive of the poverty burden on the younger age demographics.  It is a fairly straightforward analysis to look at the bottom 40%, for which the entire group shows average expenses greater than income.

The Census Bureau reported that in 2010 only 21.5% of householders were 65 and older.  In 2011 the estimate was 22.1%.  But the Census Bureau reported earlier this year that the median household income for householders 65 and older was $33,118.  This puts the median income in the middle quintile of the new survey (by a $6,000 margin), so it seems that significantly less than half of the 65 and older households could be in the two lower income quintiles.

A reasonable estimate is that the lowest two quintiles  contain considerably more than 36 million households that are not 65 and over out of the more than 48 million households in those two lowest groups.  Significantly less than 25% of the lower 40% could possibly be 65 and older households.

There are poverty problems for seniors, but it is not valid to attribute a significant portion of the low income problem to those 65 and older.  There are more than 75% of the lowest 40% household incomes that are for households headed by someone under 65.  That is more than 36 million households.

John Lounsbury

Sources:









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved