# Real-time Spending Inequality

*The year-over-year change in measures of spending inequality: ratio of spending of households in the fourth quartile (Q4) of the distribution of income to spending of households in the first quartile (Q1) of the distribution of income (Q4/Q1), ratio spending of the fourth quartile to the third quartile (Q4/Q3), and ratio of spending of the second quartile to the fourth quartile (Q2/Q1)*

#### What we do?

* Real-time Spending Inequality* provides timely updates on the status of consumer spending inequality in the US. We do so by using data on spending from credit cards, debit cards, and bank accounts.

#### Why?

The Covid-19 pandemic has shown the importance of real-time data in understanding the scale of the economic crisis and determining the appropriate government response. In contrast to aggregate data on spending, income, and the labor market, little real-time data on inequality exists. The main government surveys used to estimate spending and income inequality are released with significant delays. Without a real-time measure of spending inequality, academics and policy makers are blind to this important measure of welfare.

#### How?

We use new anonymized transaction-level data from Earnest Research to develop real-time measures of consumer spending and income inequality. The data set contains information on a panel of 10 million households and is updated in near real-time. We use the Earnest data to construct the first real-time distribution of household consumer spending in the United States. Our primary measure of inequality is a cohort study: we sort households into four groups based on their income in 2019 (before the pandemic), and follow how spending of these groups has been changing.