Federal data reveal that between October of 2010 and October of 2011, real average weekly earnings fell by almost 2 percent, even as workers collectively put in more hours. The problem is that 70 percent of the economy depends on consumer spending, but 80 percent of families are experiencing declining wages. We aren’t suffering from some mass hysteria or lack of confidence; we’re broke.
Per person demand for domestically produced goods and services remains 7 percent lower than before the recession, 8.5 percent lower than what we’d see under normal growth. Consumer spending data from the Bureau of Labor Statistics reveals that lower income families are pinching their pennies.
Since 2006 families with incomes of about $10,000 have cut their spending on fresh food, clothing, household goods, and transportation dramatically. Families bringing in closer to $30,000 have cut back too, and not just on luxuries: 25 percent less spent on beef, 23 percent less on meals away from home, 48 percent less on sheets and towels for their homes, and their young children are going to school with as much as 33 percent fewer new clothes.
Many of these families just don’t have the financial stability to handle holiday shopping this year.