Have you ever heard of the Bell Curve? Basically, it is a symmetrical graph with low ends on either side and high in the middle. Much like looking at a cross section of a bell. For our discussion today, I am going to assume the Middle Class sustains the economy. Yes, the wealthy do their share. I just think that because the Middle Class has more people, they influence the consumer-based economy more.
That is why I found the article on the zerohedge website interesting. Please see:
http://www.zerohedge.com/news/2013-03-02/guest-post-16-signs-middle-class-running-out-money
Now I am aware this blog could be long if I wrote about all 16 signs individually and quite frankly I don't want to. So I have picked a few themes to comment on and please bear in mind I have done so because they relate best to the Panoramic View. The numbers correspond to the list in the article.
2. / 6. / 7. / 8. / 9. These all discuss retail chains such as J.C. Penney, Best Buy, Walmart, etc. They are all struggling. The next time you go into a large retail establishment, look at their shelves. Are they stocked as well as they were even a year ago? The article also mentions transportation. If no one is buying, no trucks are rolling, and no products are moving through the manufacturing and distribution process. Cash flow has become a problem because the consumer is not buying.
4. Subway Restaurants have seen a dip in sales. Really? To me, you can't beat a 12 inch sandwich for $5.00. I get 2 meals out of that. The founder believes it is the taxes that is hurting their business, but people will eventually come back. Now granted, their subways are a good deal. But people are cutting back on all restaurant eating from their budget. Necessities and nothing else. Subway falls into the "nothing else" category. I am not sure former customers will return.
1. / 10. A quarter of Americans have more credit card debt than savings in the bank. I was surprised at this one. After the 2008 fiasco, people learned they must trim down their debt. And they did. They paid off credit cards, use cash more, and stay within their household budgets. Likewise, Small Businesses knew they had to create profits differently too. Many deleted costs where they could, diversified their products and services, and paid close attention to where they could establish new contacts. But maybe number 10, College Debt, has driven people to use credit cards because a portion of their salary is dedicated (or vice versa) to paying this debt. Maybe this is a much larger problem, not only for the amount of debt but also for the length of pay-off time. Maybe we should be more concerned about this from a panoramic view and its implications to our economy as a whole.
Whether you are part of the Middle Class, your products and services are used by the Middle Class, or you recognize the importance of this topic, you need to understand how our economy is influenced by the purchasing power of the Middle Class. Don't be fooled by the stock market. It is more important to watch the retail quarterly earning reports. It is vital to continue to watch this in the upcoming months and next few years. Prepare yourself and your business for any trends you see coming. The domino effect of the Middle Class purchasing power, or lack thereof, will affect your company. Plan now for that eventuality.
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