Legend has it that the writer F. Scott Fitzgerald said the rich are different: They have more money. While the very rich are a relatively small percentage of the economy, they are often the focus of economic policy. Extension economist Mike Walden explains why.
“For one simple reason: Although you may be dealing with a relatively small number of people who are very rich, they actually account for a much larger percentage of consumer spending in our economy. And, again, consumer spending — really spending — really drives our economy.
“For example, if you take the richest 5 percent of income earners in the country, they actually account for 37 percent of all consumer spending. So 5 percent of the people account for 37 percent of all consumer spending.
“Furthermore, this percentage has been going up. In 2006 the top 5 percent of earners accounted for 28 percent of consumer spending. And those rich are not only big spenders; they are also big savers, and we need people to save money because that provides the capital for businesses to borrow and make improvements.
“So the rich are a very important component of our economy. And so that means when we talk about economic policy that may affect them, we need to be careful because they can in fact drive where the economy is going.”