So I've been thinking about this.  It makes sense that you need demand for products as well as companies to actually produce those products.  Also, I understand that the disparity in income is increasing, but I'm not so sure that poor people are buying less stuff.  Most of my friends have higher standards of living then I do regardless of whether or not they earn more than I do.  For example, my brother earns far less than I do but has an x-box, play station, lots of games for those consoles, movies, tv shows, x-box live, bigger flat screen tv than I do, etc.  I have an x-box which was given to me by someone and have only bought one game for it.  My wife and I bought a flat screen TV for just over $100 because we used gift cards from out wedding.  We buy cheap food as much as possible and don't eat out very often.  I'm in school and so funds are pretty tight most of the time. 

Perhaps part of the problem is people who live outside of their means?  I know plenty of people who make fairly low wages (like I do) but who have gotten new vehicles because they magically got approved for loans with little or no down payments.  This then saddles them with debt for years keeping them from developing savings that can be used to improve themselves (schooling, start up business, whatever) and increase their wages.  I'm not trying to blame poor people entirely for their own poverty, but certainly wise financial decisions have to play a part.  So, anecdotally, at least, it seems to me that "poor" people are still spending lots of money. 

Anyone have thoughts on this?  Are people living outside of their means and how does that affect the economy? 

P.S. I'm referring mostly to Americans, not because I'm trying to be ethnocentric but it's where I live and what I have experience and context for.  My apologies to JA37 and anyone else who is from a different country.  Perhaps the situation in Europe or Australia is different.  I'd be curious to hear your thoughts on the situation in your respective countries.