Top earners seen as US spending pillar

NEW YORK (Reuters) - Wealthier Americans account for far more U.S. spending than their less-wealthy counterparts who are more likely to get squeezed by higher energy prices and interest rates, Citigroup's chief U.S. equity strategist said.

"Be really careful about how you think energy or interest rates affect American consumption," said Tobias Levkovich, Citigroup's chief U.S. equity strategist, speaking at the Reuters Investment Outlook Summit in New York.

While many investors are fretting that near-record crude oil prices would crimp household budgets, Levkovich said: "I don't go nuts worrying about what happens with energy prices" and their effect on the consumer.

Twenty percent of the highest-earning Americans account for 42 percent of consumer spending, while 20 percent of people at the bottom of the pay scale account for just 8 percent, he said.

"It's a five-to-one ratio," Levkovich said.

He said while wealthier Americans don't buy more, but they spend more.

"They buy more expensive versions of the same product," Levkovich said.

Consumer spending, which accounts for two-thirds of U.S. economic activity, is the biggest driver of corporate profits.

Besides higher gasoline prices, a slowing housing market has also added to worries about a spending slowdown.