As Income Rises

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Category: Business and Industry

Date Submitted: 03/12/2011 07:33 AM

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As incomes rise, people are gaining access to a multitude of consumer items associated with greater prosperity:

• In 2002, 1.12 billion households (about three quarters of humanity) owned at least one television set.

• There were 1.1 billion fixed phone lines in 2002 and another 1.1 billion mobile lines.

• The Internet now connects about 600 million users.

The seasonal nature of discretionary spending

December is the busiest shopping month, and for certain goods it is the month of greatest sales. In 2002, for example, jewellery stores and music stores generated nearly 20 percent of their annual sales in December alone (Lin 2003). The nature and intended use of other goods and services also makes the demand for them seasonal, such as winter clothes, patio furniture and tax services. Statistics Canada notes that "because of such seasonal factors, simply looking at monthly statistics may not be enough to reveal underlying trends."263 Therefore, a number of data series published by the statistical agency (for example, retail sales) are adjusted to eliminate the effect of seasonal variations. As for the Survey of Household Spending, it collects information for a full calendar year.

Interpreting changes in household expenditures over time

Changes in average expenditures can be due to three factors, with fluctuations in the prices of goods or services being a first obvious one. Second, averages (calculated across all households surveyed) may also be impacted when there is a change in the number of households that choose to spend on a particular item. Finally, households may simply choose over time to buy a different quantity or quality of products. All three sources of change should be considered when analyzing growth rates in expenditures. The sectoral analyses in Sections 9.4 to 9.6 focus on average expenditures and growth rates per reporting household, and compare relevant price index information, when possible. Changes in quality, however,...