What Is The Relationship Between Consumption And Income?

Traditionally it's been proportional - the more you make, the more you spend/consume.  In the past two decades, we've seen that relationship change, in that people are tending to spend a higher percentage of their income that they used to, and it's less proportional.  Most of that is attributed to the increased availability of credit to consumers, so they can actually spend beyond their incomes.

In the theory of economics, there is a direct relationship between income and consumption. When income increases, it is more likely to increase the consumption of goods while assuming that he has now more money to use. Usually income is increased when there is a boom in economy. A booming economy predicts that people have more access to resources and will buy more. Similarly, when income decreases, people start reducing their expenditures. In simple words, people's propensity to save increases in the case of less income and decreases in the case of higher income.