The Economic Benefits of the Trickle-up?

The Wall Street Journal suggests that the economy might not be affected by the credit crunch because it will mostly hit the poor.  Since the poor don’t spend that much, the economy can happily sail along.  I was wondering how multipliers might differ by income class.

 

Patterson, Scott. 2007. “Has the Crunch Filtered Down to Consumers?” Wall Street Journal (18 October): p. C 1.

“Dean Maki, an economist at Barclays Capital, expects households to muddle through even as lenders get more strict.  He says many of these credit problems have hit lower-income consumers, while wealthier spenders remain largely unscathed.  Roughly half of consumer spending comes from the top 20% of the income bracket, Mr. Maki says.”

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