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To monitor the evolving American consumer market, Proctor & Gamble executives study the Gini index, a widely accepted measure of income inequality that ranges from zero, when everyone earns the same amount, to one, when all income goes to only one person. In 2009, the most recent calculation available, the Gini coefficient totaled 0.468, a 20% rise in income disparity over the past 40 years, according to the U.S. Census Bureau.
‘We now have a Gini index similar to the Philippines and Mexico — you’d never have imagined that,’ says Phyllis Jackson, P&G’s vice president of consumer market knowledge for North America. ‘I don’t think we’ve typically thought about America as a country with big income gaps to this extent.’
“As Middle Class Shrinks, P&G Aims High and Low” - Wall Street Journal
via marathonpacks:
A basic primer on neoliberalism. A basic thing the Occupy Wall Street folks should be screaming about.
via bmichael:
In order to read the full article, you have to like Google its title or something and then click through from Google. It’s worth the effort because, again, it’s super interesting to think about the new two-tiered America. (Ie, a top tier with mostly all the money and a bottom tier that’s statistically large but has virtually none of the money.) Especially when you consider that (maybe) the big distributors of culture are going to be driven by the top tier, but by virtue of their business model, be taken in mostly by the bottom tier. How is advertising and consumer culture going to cope with the disappearance of a middle class to project its desires onto? We’ve gone through recession rap, but I think there’s going to be a large field for recession everything for the next few decades.
So worth the effort. I was struck again, reading it, by how insufficient companies are as arbiters of the shape and character of society, because for all their conglomerate intelligence and occasional, individual brilliance, even the largest and most powerful of them are essentially response mechanisms, thriving or failing by their success in adapting to circumstance*:
Luxury retailer Saks Inc. is bolstering its high-end apparel and accessories because its wealthiest customers—not those drawn to entry-level items—are driving the chain’s growth.
Citigroup calls the phenomenon the “Consumer Hourglass Theory” and since 2009 has urged investors to focus on companies best positioned to cater to the highest-income and lowest-income consumers. It created an index of 25 companies, including Estée Lauder Cos. and Saks at the top of the hourglass and Family Dollar Stores Inc. and Kellogg Co. at the bottom. The index posted a 56.5% return for investors from its inception on Dec. 10, 2009, through Sept. 1, 2011. Over the same period, the Dow Jones Industrial Average returned 11%.
“Companies have thought that if you’re in the middle, you’re safe,” says Citigroup analyst Deborah Weinswig. “But that’s not where the consumer is any more—the consumer hourglass is more pronounced now than ever.”
How much of this is more or less inevitable, the consequence of markets opening up, technological shifts, and how much is policy? How much is because policy was shifted for precisely this outcome? A great deal, I suspect.
*I know: lobbyists. Though to continue my metaphor, in that they’re behaving like megafauna and flora, creating the conditions for themselves to thrive, regardless of long term viability.
