Datapoints #1

In the Wall Street Journal on Monday September 12, 2011 there was a fascinating article on the U.S. macro economy entitled, “As the Middle Class Shrinks, P&G Aims High and Low.” The article presents a kind of mini-case study of how America’s largest consumer products company (their sales were a staggering $82.6 B last year) is responding to the widening income gap brought on by the recession.

If you read and other left-leaning blogs, you would have heard about about the Gini Index which tracks income inequality. This was the first time I had seen it mentioned in the Journal. Until now, I was unsure whether the Gini was a propaganda tool. However, the article states that according to the Gini index, “We now have [an income gap] similar to the Philippines and Mexico.”

This is a startling datapoint and giant corporations like Proctor & Gamble and McDonald’s are already responding to it by changing-up their product offerings.

Another interesting datapoint mentioned in the article gives a definition to something that every American cares about, the middle class:

In the wake of the worst recession in 50 years, there’s little doubt that the American middle class–the 40% of households with annual incomes between $50,000 and $140,000 a year–is in distress.

The name that Citigroup execs have given to the shrinking middle is the “Consumer Hourglass Theory.”

A story on NPR this morning explicitly mentions something that has haunted me for quite some time: the notion that my standard of living might shrink from that of my parents and grandparents–that the American Dream is in decline. This is something every American needs to care about and should be the basis for our national conversation during this election season.

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