U.S. Earning and Spending Differences - Essay Example

This means that diverse households feel inflation differently, forcing them to spend their earnings in diverse ways (Zumbrun).

In 2015, for instance, the expenditure survey introduced additional data, which made it possible to segment Americans into tenths. About 12.5 million units of consumers prevail in each tenth. For the bottom three subdivisions, the individuals here earn about $20,000 or less every year, although they spend more than they earn. After breaking down their income sources, the poorest 10 percent of Americans are accorded extra public support compared to other groups. The subsequent 20 percent generate at least half of their earnings from retirement programs and social security. Among the third and fourth 10 percent of Americans, retirement programs generate a big part of their income, indicating that retirees comprise a large portion of the income distribution among the lower-middle-income earners. The upper half of individuals in America receive more than three-quarters of their earnings from salaries and wages. Furthermore, Americans between the sixth and ninth divisions are anticipated to earn from $51,000 to $112,000 yearly. The top ten earners generate approximately $220,000. In this group, most individuals in America generate most of their earnings from wages, although they get around 10 percent from various sources, mostly self-employment (Zumbrun).

When consumers grow wealthier, they change their patterns of spending, sometimes melodramatically. Consumers who earn high income spend less on health care, food, and housing. Although they dedicate more funds to these categories, such spending is less when compared to their overall expenditure. Transportation is accorded a large portion of expenditures for individuals in the middle-income class, while it is less for individuals earning a low income. The middle group serves as a beneficiary when prices of gas go down. Education occupies the largest portion of expenditures for both of those at the top and bottom of the income distribution. In addition, whenever households generate additional income, they allocate slightly more funds to entertainment, and more on financial products, including retirement programs, annuities, and insurance. The bottom 10 percent allocate about 1.4 percent of their income to these financial products, which amounts to about $3The top Top 10 percent contribute more than 17 percent to the sources, which amounts to more than $20,000 annually (Zumbrun).

From the paper, I have realized that individuals adopt different spending patterns based on the earnings they generate. I believe it is right to worry about economists can keep track of how people manage their expenses. However, the information presented offers more details concerning how diverse Americans spend their income. Therefore, it is true that even when inflation remains low, the rise in prices for food and housing for particular families are challenging households compared to others.