It appears the middle class is being abandoned for much greener (money), wealthier pastures.
I can’t tell you enough how important I think this story is. It’s the underlying reason for everything right now, with no sign of it stopping. Scary as well as depressing, we’re in real trouble if all we have left are dollar stores:
NY Times: Business knows better than anyone else that the middle class is shrinking. "As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away. If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts."
In response to the upward shift in spending, PricewaterhouseCoopers clients like big stores and restaurants are chasing richer customers with a wider offering of high-end goods and services, or focusing on rock-bottom prices to attract the expanding ranks of penny-pinching consumers. “You don’t want to be stuck in the middle.”
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995 … Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent. 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households.
Sears and J. C. Penney, retailers whose wares are aimed squarely at middle-class Americans, are both in dire straits. Investors have taken notice of the shrinking middle … Shares have fallen more than 50 percent since the end of 2009.
A shift at Darden … casual dining properties like Red Lobster and Olive Garden has dropped in every quarter but one since 2005 … On the other hand, at the Capital Grille, an upscale Darden chain where the average check per person is about $71, spending is up by an average of 5 percent annually over the last three years. LongHorn Steakhouse, another Darden chain, has been reworked to target a slightly more affluent crowd .. Now, hedge fund investors are pressuring Darden’s management to break up the company and spin out the more upscale properties into a separate entity.