on May 26, 2011 by ZooKeeper in Dollar Doom, The Economy, Uncategorized, Comments (1)
Want Proof The Middle Class Is Screwed, Look At Retail Stock Prices
Today, Thursday May 26, 2011, stock market data unquestionably proved that the American middle class is being destroyed while the rich prosper. Even if you have no interest in the stock market, I will make this easy to understand and you will find the information quite disgusting.
The Gross Domestic Product or (GDP) is the total value of all good and services produced in the country within a certain period of time. To think of it more simply, if you owned a small business, it would be similar to the amount of widgets you sold in a given period. Another way to look at the GDP in relation to ordinary folks is that it is sort of like your take home paycheck. The point being, as the economy gets better, the GDP goes up. As you get more hours at work or a raise, your paycheck goes up. Finally, if your small business sells more widgets, you revenue goes up.
Today, the GDP data came in disappointingly low. This shows that the Untied States economy is growing slower than analysts were expecting. To make matters worse, the weekly number of people filling for first time unemployment benefits increased more than expected. If you combine these two sets of data, one can only conclude that the US is not recovering for ordinary citizens.
The real slap in the face comes when you look at which stocks are performing poorly and which ones are performing well in the retail sector. The retail sector of the stock market is the stocks that sell retail goods. For example, Gap, Abercrombie and Fitch, Wal-Mart, TJ-Max, and so on are all retail sector stocks.
Now for some time, the types of retail stocks that have been performing the best are known as “luxury retail” stocks. These are composed of the fancy high end stores where an outfit can cost as much as an average person’s wardrobe or a piece of accessory jewelry costs as much as an average engagement ring.
Today, the luxury retailer Tiffany and Company reported very good earnings and their stock took off. In addition, other high end retailers had very good sales numbers as well. The disgusting part is that your average retailers for middle class folks are not doing so well, especially on US sales.
In fact, the best two sections of retail stocks are the very high end retailers and the very low end retailers. This tells us that there is 100% no doubt that the wealthy are doing just fine and feel very comfortable blowing several thousand dollars on a charm bracelet from Tiffany and Co.
On the other hand, the success of the lowest end retailers like , Dollar Tree and Wal-Mart, shows that middle class people are feeling so pinched that they are dropping down to the cheapest stores so that they can afford clothing and an occasional present for a loved one.
Conclusion: Here is numerical certainty that the middle class of the United States is being destroyed right in front of our eyes.
PCD
May 27, 2011 @ 4:20 pm
I’d like to suggest another consideration to factor into the phenomenon that the higher end retail stores are doing better than the lower end ones. I know that my friends, family and I are less prone to spend money on “just stuff”. Most of us are refraining from the impulse purchases that we would have rather thoughtlessly made in the past that “nickled and dimed” our wallets and our potential ability to save.
People are saving more deliberately and are willing to wait for things that will mean the most to them. This has been likened to the way Americans were spending in post-war during the 1950’s. I some cases, such as purchases for loved ones or a “reward” to oneself for an accomplishment or milestone, the item of choice tends to be more high end. High end can represent quality, status, a special treat or whatever — something perceived as worth the wait.
An example of this I recently heard is from one of my nieces. She quit smoking in January and has saved $400 for not buying cigarettes. Now she is contemplating how she will reward herself, and she is interested in buying a high-end purse from a designer brand.
I was reading somewhere that high end cosmetics are doing great because women are treating themselves to these “luxuries”. I guess it’s part of our culture, and maybe part of human nature, to want to feel kind of pampered or rewarded in life.
I do agree that the scenarios I described are NOT the reality for those out of work and struggling to put every meal on the table. Still, it seems that people like to celebrate with things they want, and maybe the overall bar for what we are willing to spend hard-earned money on has raised.