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Brazilians' 'fanatical' travel to US helps drive Brazil's economic boom

Brazil's new middle class, by spending record numbers on consumer goods and services like travel, is attracting investment and international business to the country, fueling its growth.

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...A current representation of traditional Brazilian financial mismanagement is the high level of indebtedness of its families, which reaches 65% on average in the main cities of the country. In Curitiba, for example, the average level of indebtedness of its families – according to the Brazilian Federation of Commerce – has reached 88%. In Natal, the capital of Rio Grande do Norte, 40% of the family income is, on average, committed to debts. In the last year, 10 Brazilian states...were showing levels of indebtedness of its families beyond 70%. In 2011, at least 15 states are in the same situation.

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There are also American-style heath problems – as the middle class has grown, so have Brazilian girths: nearly half the population is overweight, and childhood obesity has more than quadrupled in the past two decades.

Despite gains in salaries and purchasing power, the new middle class still falls behind the upper classes in access to education, services, sanitation, and culture. A 2009 study found that while 87 percent of the upper class finished high school, only 59 percent of the middle class completed a high school education. The latest SAE study found that the middle class typically spends less than 30 percent of what the upper class spends per month on leisure and culture. While over 80 percent of wealth households have landline phones, less than 50 percent of middle class homes do. Seventy-two percent of upper class homes have an Internet connection, compared to only 30 percent of middle class households. Nearly all wealthy households have adequate sanitation, compared to three quarters of middle class homes.

These challenges will very likely recede over time, assuming real wage growth and low unemployment hold. Brazilian middle-class salaries are lower than in developed countries, which would be less of an issue if it were not for inflation, a high cost of living, and extremely high prices in major cities. Aside from reigning in consumer debt, striving to keep prices within a reasonable range of middle class salaries will help sustain this enormous contingent of consumers fueling Brazil's booming economy.

--- Rachel Glickhouse is the author of the blog Riogringa.com.

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