Category Archives: spending patterns

March Consumer Price Index Registers a Modest Increase

Posted on April 13, 2012 by admin

The U.S. Bureau of Labor Statistic’s Consumer Price Index (CPI) for March 2012 shows gasoline leading the way as the indicator rose to an annual rate of 2.7 percent for March. Gasoline prices climbed 1.7 percent for the month. Over the course of  a year, gasoline prices would have an annual inflation rate of 8.7 percent. Overall, the prices of goods and service increased 0.3 percent– in line with economists’ estimations and lower than the 0.4 overall increase registered in February. The March CPI registers lower than the 2.9 percent rate of inflation recorded in February. The core inflation rate, which subtracts food and energy costs, rose 0.2 percent during March, the equivalent of an annual inflation rate of 2.3 percent. CPI Explained The CPI focuses on the spending habits of urban consumers and urban wage earners and clerical workers. Urban Consumer Group ( CPI- U) – Eighty-seven percent of the U.S. populace fit into this group. The CPI-U considers the majority of residents living in metropolitan locations. CPI-U includes self-employed, professionals, retires, poor Americans, unemployed people, clerical workers and other urban wage earners. The CPI does not include the spending patterns for Armed Services members, residents living in rural locations, farmers, or people who live in institutions. Urban Wage Earners and Clerical Workers (CPI-W) – The CPI-W component of the Consumer Price Index computes expenditures of households as defined in the Urban Consumer Group, along with two other conditions: 1) Over 50% of the household income has to come from clerical workers or wage earners. 2) At least one of the household earners must have a minimum of 37 weeks of employment during the past 12 months. This component of the CPI encompasses around 32 percent of Americans and makes up a subset of the CPI-U group. Goods and Services Measured by the CPI The consumer price index measures over 200 goods and services, divided into eight major groups, purchased by either CPI-U or CPI-W. The eight categories measured by the CPI are: Food and beverages Housing Apparel Transportation Medical care Recreations Education and Communication Other goods and services Other goods and service includes items like haircuts, pedicures, smoking products or burial services. Other goods and services measured by the index include user fees for water, sewage or vehicle registration. The CPI calculations include taxes associated with the purchase of goods and services including property taxes. The Consumer Price Index excludes income taxes, social security tax and investments. Economists and market analysts rely on the CPI for a number of uses, such as an economic indicator, a deflator for other indicators or use to adjust dollar values. The CPI represents the impact of price increases on average households. Consequently, the CPI will not reflect the exact effects of price increases on individual households. Do not confuse the CPI with the cost-of -living index. According to the Bureau of Labor Statistics , the cost-of-living index monitors price changes over time and calculates the amount necessary for consumers to attain a specified standard of living. Continue reading →

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Fewer Women in Town Means Men Spend More

Posted on February 6, 2012 by admin

Researchers at the University of Minnesota’s Carlson School of Management conducted the study by asking men to read newspapers indicating that their local town either had more men or more women. Each different group of men then had to indicate the amount of money they would borrow on credit cards each month and the amount of money that they would save each month. According to the results of the study, the men in the town with a scarcity of females were willing to borrow as much as 84 percent more on their credit cards each month. In addition, the saving rates in the towns with fewer women fell a full 42 percent as compared to the towns where women outnumbered men. These numbers are also supported by real-world information obtained by comparing Columbus and Macon Georgia, two towns that are just 100 miles apart. In Columbus, where men outnumber women, the average consumer debt was $3,479 higher than in Macon where women outnumber men. Explaining the Results of the Study One possible explanation for the study results is that men in towns with few women are willing to spend more in order to impress and capture those women. This interpretation seems to be supported by the results of data collected from women on whether a shortage or abundance of men would affect their finances. While the women’s spending and saving behavior was not impacted by the number of men, the women did report that in a town where they were outnumbered, they would expect the men to spend more on dates, gifts and engagement rings. Men therefore, may overspend in order to try to woo an attract women in a town where there is a perceived shortage. This, of course, is simply a basic principle of supply and demand. With a smaller supply of women, men are willing to spend more to impress those that are there and to “get” these women. Men’s competitive instincts may also kick in as well, as they try to fight for the limited number of women available even at a cost to their finances. Other Explanations Of course, the idea that men are spending more to try to attract a women due to a limited number of females is just one possible explanation for why men might spend more when there are fewer women around. Other possible explanations may exist as well. For instance, in a town with a larger number of women, men might feel as if their odds of getting married are better. Most men like to have their financial lives in order before they marry and like to feel as if they are able to provide for a family before doing so, and so might be more inclined to spend less and save more in anticipation of becoming a groom. Men also may feel as if they will have more spare time on their hands if they aren’t dating or in a committed relationship, and that spare time will translate into spending extra cash. Responding to the Study Regardless of the underlying reason why men spend more when women aren’t around, it is important to recognize this phenomenon and to take steps to combat it. Any time you allow some outside factor or source to dictate how you spend- whether that outside factor is a scarcity of women or a desire to keep up with the Jones’- you end up making the wrong financial decisions that only cause you trouble in the long run. Continue reading →

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