11/29/2011 4:08 PM ET|
It's a Saks or dollar-store Christmas
Christmas at the high end
Just like stores at the low end, high-end retailers are seeing boom times -- but even more so. That's basically because the rich are getting richer a lot faster than the middle class is getting poorer.
Tiffany reported an impressive 17% gain in sales for the third quarter. As a sign of just how much money the rich have to throw around, just like last quarter sales of anything that cost more than $250 were particularly strong, with "notable increases at the highest price points." (Have a look at Tiffany gifts priced at more than $5,000 here.)
Nordstrom saw sales advance 8% in the third quarter, as designer handbags, shoes and dresses sold briskly. Saks reported sales gains of 10.3% for the first nine months the year with strength in women's shoes, handbags and jewelry, and men's apparel, shoes, and accessories. And Coach, which sells handbags, reported sales gains of 9% in the most recent quarter.
The hole in the middle
Several major trends explain the rich-man, poor-man Christmas that experts foresee.
First, of course, the sluggish economy has made it hard for people to find good jobs. It has also made it easy for companies to cut pay or withhold raises, an effective a pay cut with inflation running at about 2% a year.
Next, the housing-market slump has hammered middle-class families, who typically have most of their wealth in their homes. At the end of March, Americans had $6.1 trillion in home equity, defined as the value of the house minus the mortgage. That's half of what we had in 2006, says the Federal Reserve.
Grandma and Grandpa have a harder time buying gifts, too, with many of the elderly hit by higher prices for out-of-pocket medical expenses and, well, everything else.
All of these negative trends have hit the middle class. Meanwhile, it's clear why the rich are doing better and better. The stock market has rallied big time since the recession, despite recent weakness, and the rich are far more likely to own substantial amounts of stock. Corporate profits are rising sharply, often because of cost-cutting linked to job cuts. This means that pay is soaring for those whose incomes are linked to profits, like executives who get bonuses and stock options.
Here are some numbers that paint the picture:
- From 1998 to 2010, an average middle-class family saw its income decline by more than $2,500, or about $200 a month, according to a recent Census Bureau study. At the high end, households in the top 10% saw their annual income rise by an average of $3,600. And the average annual income of households at the bottom fell by $1,500.
- Between 1993 and 2008, the top 1% of families raked in more than half the overall gains in income, according to economics professor Emmanuel Saez of the University of California, Berkeley.
- The portion of families that live in middle-income neighborhoods is down sharply since 1970, according to a study by Stanford University. In 2007, the most recent year examined by the study, 44% of families lived in middle-income neighborhoods, down from 65% in 1970. And a third of families lived in either affluent or poor neighborhoods, up from 15% in 1970. In other words, fewer people are in the middle -- a trend that almost certainly has continued.
- The Gini index gauges income inequality on a scale from zero, when everyone earns the same amount, to one, when one person earns everything. In 2009, the Gini index was 20% higher than 40 years before, at 0.468, according to the U.S. Census Bureau.
- Anecdotally, stores catering to price-minded consumers confirm all of this. For a lot of those customers, "the recession hasn't ended," says Dollar General CEO Rick Dreiling. "The economy is creating an entirely new customer. It reminds me very much of the 1970s when the warehouse stores came up. I ran a warehouse store in the 1970s. And I would remember people standing in line with a fur coat trying to save a few dollars."
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Christmas is way too commercialized. Im not buying any gifts except good food and some drinks for my friends and I to get together. We are all grown and can buy our own necessities and wants. Any gifts given are kind gestures but not required.
The best gift is to have a zero balance on my credit card, bills paid on time and savings in the bank after all the hoopla has settled!
Christmas is about family and good friends sharing and spending quality time! besides nordstrom/saks are way too overpriced!
Oh, there's a hollowing-out of the middle-class, but it's not because the rich don't pay enough taxes. It's because the government (from congress on down) spends everything it can get it's hands on like there's no tomorrow. They wealthy pay their share and then some, but luckily they can still afford it.
The middle-class pays their share, too, but when the prices of goods and services rise, the middle-class get hit the hardest... their earnings simply can't keep up with the cost of living, plus the tax bill they get hit with each year.
As for the poor. I know people on welfare with iPads, iPhones, and the monthly costs that go along with those. I'm middle-class and can't afford those luxuries. They are abusing the system, and taking away from the poor who really need it.... again, wasteful spending by our government.
We the people are a lot at fault here. Quit spending money that you don't have. All you're doing is putting yourself more in the hole and making the rich richer. We have to realize that this country is robbing us and our wallets are getting lighter and lighter. We must make sacrifices now and refrain from over spending . You need to save , instead of spend.
I'm so tired of hearing people say .. "I deserve" ... then they go out and buy a new car or upgrade to a larger or better house that they know they can't afford. Wake up people . Once you stop spending you'll see how fast the gov will have to make adjustments ( for the middle class).
We the middle class ARE in control, if only we would use common sense and tighten our belts until things start to pick up... otherwise we could lose everything . Again, STOP spending money you don't have !!!!!!!!!!!!!!!
i stopped buying gifts for 10 years now and don't regret it. i stopped buying things for myself for 10 years now and i don't miss anything.
i only buy the necessities and use what ever i have to buy necessities for others too.
so why do people like us care about those wealthy retailers not making ends meet. perhaps, they should not give out executive bonus's this year.
but you know what? the executives will find a way to squeeze their bonus's out from somewhere - maybe laying off a few hundred low pay workers again.
The reason why I say we "the middle class" ARE in control is ... if we stopped spending, and even if we didn't go to work for a day .. who loses the biggest >>>> the rich do . Once we stop putting money in their pockets , they'll have no choice but to lower prices and up wages or else we the middle class will say NO again to them. See how simple it is .. if only we would use common sense.
The same thing goes for attending sports, going to the movie theater and buying CD's, electronics, etc. Once we say NO to these outrageous prices only then will things turn in our favor. It sickens me to see how the pro's and movie stars are living in luxury and we have to just sit back and watch and weep ... if we would stop supporting them they would have no choice but to make things more affordable. When was the last time you could afford to take your family to a baseball game or movie theater without feeling guilty what you spent for this outing .
We could put the rich out of business before they put us in the poor house .. but we have to
stop buying and paying their wages !! That is the ONLY answer to this war against the middle class.
Ask yourselves this question ,,, What would the rich do if we all decided to stop buying and stop going to work for just 1 week ? The rich would lose a hell of a lot more then we would.
I have moved from living in a middle class neighborhood to living in the projects over the past few years. I work two jobs both are state and federally funded and it has been rough! But I'm Just thankful! I just pray that this season people will keep in mind the true meaning which is celebrating God's Love in the birth of Jesus by sharing that love with everyone we know and don't know. We are used to celebrating with lots of gifts and stuff but this year my family is going back to basics. We will have a Christmas eve gathering with no huge dinner but simple finger foods and music with presentations by the children and games. Any gifts we buy will be from stores like my favorite Five Below which sells everything for five dollars and under! and others will be homemade! I'm excited! Yes the economy is bad but God is Greater than all that stuff! God Bless Everyone!
Christmas is suppose to be for kids. You want some good deals then don't buy for the adults during the month of December ONLY buy for the little ones that believe in Santa and let the adults have their Christmas in January. You'll see how the prices are cut if no one buys in December.
Just tell Jesus, Happy BELATED Birthday, He'll understand.
I am not sure in which category I belong. I am retired, on SS and have a small income from my pension fund. Our total income from all sources is about $45,000 on which my wife and I live quite comfortably. We do occasionally go to a Wal-Mart for certain items, Pet foods, dental supplies and prescription medications. We purchase our clothing at Dillard's, Macy's and other middle class and middle price department stores.
The story implies that "Middle Class" and "Middle Income" people are only able to buy at the "Dollar Stores". It sounds to me that the writer of this story considers anyone who doesn't have an annual income of $250,000 a year as being doomed to shop at the Dollar stores.
Maybe anyone who doesn't have a Job is forced to shop at the Dollar Stores but if Middle Class is now defined as a Jobless person, then I think that the term "Middle Class" as a description of an income group, needs to revert back to its original meaning.
I know literally thousands of people, like myself, some retired, some working, who are true Middle Class and who are able to purchase many of their family needs at Department stores.
If this story was anywhere close to accurate, all of the Department Stores would have gone bankrupt and out of business 3 or 4 years ago.
I acknowledge that people who have lost their jobs or are unable to find one providing adequate income and are living on unemployment assistance or welfare, are having a tough time now but you can't accurately say that "The Middle Class is no longer able to shop at Wal-Mart and only able to buy at the Dollar Store"
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