
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, April 19, 1990                   TAG: 9004190270
SECTION: BUSINESS                    PAGE: B9   EDITION: METRO 
SOURCE: San Francisco Chronicle
DATELINE:                                 LENGTH: Medium

'80S NOT SO `ME FIRST' AFTER ALL

A new study of the U.S. economy during the 1980s casts doubt on the popularly held view that it was the "me decade" - one long shopping spree financed on credit.

Only the wealthiest 20 percent of the population spent appreciably more during the '80s than during previous decades, according to the Economic Policy Institute, a Washington think tank.

In a report released Tuesday, the group noted that consumption by the remaining 80 percent of Americans was virtually flat from 1980 to 1989, rising an average of only 0.2 percent per year after adjusting for inflation.

Nor does it appear that Americans cut back on their savings to pay for a consumption binge.

The common perception of a low U.S. savings rate - a rate that doesn't free up enough money to finance investment - is based mostly on misleading statistics, concludes American University economist Robert Blecker, the study's author.

He is not the only economist poking holes these days in the conventional wisdom about the economy of the '80s.

"The idea of a big consumption binge is ridiculous," said Sandra Shaber, a consumer expert at Futures Group, a consulting firm in Washington. For one thing, she noted, incomes did not increase enough for this to happen.

Spending by the top-earning fifth of the population rose 2.2 percent a year on average during the decade. While that was faster than during the '60s and '70s, the increased spending was supported by higher interest income and increased net worth.

The standard measure of savings shows that Americans put away a smaller share of their incomes during the 1980s than ever before. But these figures ignore increases in the values of stocks, bonds and real estate.

Blecker found little evidence that a drop in savings hurt the U.S. economy. He noted that business investment, which is financed mainly by corporate cash flow, held about steady in the '80s as a percentage of Gross National Product.

by CNB