Washington - It's
the most wonderful time of the year, and if you're a typical American, it'll
cost you about $728. That's how much the average US adult who planned to
buy holiday presents expected to spend in 2015. How they planned to fund
it differed significantly based on where they fell on the income
distribution.
That's the first
item in our economic research wrap this week, followed by analyses that look
at how urban concentration is impacting New Jersey, subprime auto loans,
and inequality mis-measurement. Check this roundup every week for the
latest on interesting and influential economic research from around the
world.
Mistletoe, holly
and loans
A total of 77
percent of American adults planned to buy holiday gifts last year, according to
the October-November 2015 survey, and on average expected to spend $728. Of
those purchasing presents, 78 percent didn’t expect to borrow to fund the
purchases. Half of those who were taking on debt expected to pay it back within
three months.
Interestingly,
low-income people were the least likely to borrow to buy gifts – they were more
likely to forgo purchases they couldn’t afford. Families with children were
more likely to take on debt and less likely to forgo gift-spending across the
board.
How New Jersey lost its cool
The Garden State
has had a pretty dismal bounceback from the Great Recession, with job gains
that lagged the nation’s. Researchers Adam Scavette and Ethan Haswell say in a
new Philadelphia Fed analysis that “one of the main challenges for New Jersey
may be that its economy is very much services-based, but many services jobs are
now clustering in cities.''
That's especially true for higher-paying,
knowledge-intensive services jobs that require lots of human capital. Aka: the
really good jobs made like a hipster and moved to Brooklyn (or Manhattan, or
Philadelphia). New Jersey can try to counter the effects by nurturing
white-collar work in places like Princeton and Jersey City, but “if larger
forces of desuburbanization continue, they may overwhelm any such efforts.”
How’s that for a pep talk?
Subprime auto: if not systemic, still scary
America is
having a record year when it comes to auto loans, with 2016 on track for the
most originations in New York Fed data going back to 1999. Strength in
borrowing has persisted even as auto loan delinquencies increase – especially
among loans made by auto finance companies, which are more likely to
lend to borrowers with poor credit scores.
“The increased
level of distress associated with subprime loan delinquencies is of significant
concern, and likely to have ongoing consequences for affected
households,’’ researchers at the New York Fed write in a blog post.
What we miss when we talk about the
super-rich
Business income
is an important source of earnings for the world's most affluent, yet
it's often at least partly overlooked in personal income measures. Using
data from Norway, researchers looked into how this dynamic can affect how we
see the super-rich. They attributed business income to personal owners as
it accrued, and saw top income shares increase significantly as a result, in some
cases.
After a 2005 tax
reform made it more attractive to retain earnings in businesses in Norway, for
example, accounting for earnings retained in the corporate sector more than
doubled the top 0.1 percent's income share in some years.
Read also: No cash for Christmas cheer
This finding has
implications outside of Norway. For one thing, the importance of business
income for inequality differs across countries, and that fact
"substantially reduces comparability of inequality statistics"
between nations. The study also adds to a long list of research
finding that it's tough to tell just how flush the super-wealthy are.
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