Consumption and Income Inequality and the Great Recession

American Economic Review · 2013 · Volume 103 · Issue 3

Abstract

We examine changes in consumption and income inequality between 2000 and 2011. During the most recent recession, unemployment rose and asset values declined sharply. We investigate how the recession affected inequality while addressing concerns about underreporting in consumption data. Income inequality rose throughout the period from 2000 to 2011. The 90/10 ratio was 19 percent higher at the end of this period than at the beginning. In contrast, consumption inequality rose during the first half of this period but then fell after 2005. By 2011, the 90/10 ratio for consumption was slightly lower than it was in 2000.

Keywords

Personal Income, Wealth, and Their Distributions, Macroeconomics: Consumption, Saving, Business Fluctuations, Cycles, General Welfare

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