Upper-income Americans' self-reported spending rose 33% to an average of $145 per day in May -- up from $109 per day in April 2010 and May 2009, and the highest monthly average since November 2008.Who is not participating in the rebound? Everyone else.
Middle- and lower-income Americans' self-reported spending averaged $59 per day in May, the same as in April 2010 and May 2009.The below chart shows the spending habits by wealth, as well as age group (and yes, there is overlap).
The difference has been labeled by Gallup as 'Frugality Fatigue' among those that CAN afford to spend (but were holding back) and those that couldn't spend (and still cannot). After all... most Americans will always have the "will" to spend (i.e. never count out the U.S. consumer), but many are finding out they no longer have the wallet (or credit) to do so:
Source: GallupOverall consumer spending increased 14% in May, driven entirely by the surge in upper-income spending. As a result, Gallup's May spending results seem consistent with reports from the lower- and middle-income retailers that consumer spending did not continue to improve last month. While spending was up overall in May, the flat spending numbers over the past three months among consumers earning less than $90,000 a year means weak sales for the retailers that serve them.
At the same time, May's spending illustrates that many upper-income consumers have the disposable income to increase their daily spending if they so desire. In a behavioral economics context, these consumers seemed to be holding back on spending prior to May in response to the length and depth of the recession, the financial crisis, and a general feeling of economic uncertainty.
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