WORLD> America
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WORLD> America
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Moderate and lower US earners under more pressure
(Agencies)
Updated: 2008-07-23 11:39 INCOMES SHRINK According to Harvard Professor Elizabeth Warren, incomes -- in inflation-adjusted terms -- have been declining since 2007. This is particularly clear in the middle- and lower- income groups. "For many families in America, the recession did not begin in the past six months. The real recession began several years ago," Warren said. Measured in inflation-adjusted dollars, incomes declined while basic expenses increased sharply, namely energy, housing and food. "Families making the same commute are spending on average of $2,195 more for gas than they did in 2000," she said. Overall, she estimates that the average family is spending nearly $5,000 more than in 2000 for a handful of basic expenses like food, health care, energy and housing. "It is no surprise that millions of families have turned to debt to try and bridge the gap between their incomes and their expenses. Debt of every kind has increased sharply," Warren said. But yet the issuers of credit cards have profited. In 2007, all-purpose credit cards generated revenues of $117 billion, up from $115 billion in 2006, Warren said. At the same time, about 43.5 percent of all households in the United States carry a balance on their credit cards, "Credit card debt now consumes a sizable portion of a family's income, leaving families with less to spend elsewhere," she said. "In effect, a huge wealth transfer is taking place." |
