The rise of dollar stores shows what's happening to the U.S. middle class. In the past, dollar stores were seen as shopping places only for the poor. But many people who were in the once-strong American middle class have been thrown into the lower-income bracket, thanks to business layoffs, downsizing and salary reductions. Dollar stores have found a niche in this economic climate.
In the economic "recovery" that has followed the Great Recession, people line up at midnight at Walmart stores in order to purchase food. These families have run low on food by the end of the month and are waiting for their government electronic benefit transfer cards to activate so that they can stock up on provisions. The average monthly payout under these magnetically encoded payment cards is $125.00 per person.
Common benefits provided via EBT are typically of two general categories: food and cash benefits. Food benefits are federally authorized benefits that can be used only to purchase food and nonalcoholic beverages. Food benefits are distributed through the Supplemental Nutrition Assistance Program, formerly the Food Stamp Program. Cash benefits include state general assistance, Temporary Assistance for Needy Families benefits and refugee benefits.
There appears to be a growing divide in the U.S. economy. The financial sector is swimming in its bailout-induced profits. Within elite circles, things appear to be just fine, but the average U.S. family doesn't appear to be getting access to new credit cards and doesn't have a store of capital to access, such as a stock portfolio.
The chart in this NPR article shows what's going on. According to a recent study by the Pew Research Center, the percentage of adults in the middle class has fallen to less than 50%, from 60.8% in 1971. Meanwhile, the percentage of adults in the lower-income bracket has increased to 29% from 25.2%, and percentage in the the upper-income bracket has grown to 21% from 14%. In other words, many middle-class adults have fallen into the lower-income ranks.
If you are one of these hardworking individuals experiencing a decline in business/income, you might want to consider doing some research and change what you are doing, because things will likely get much worse before they get better.
After Donald Trump's strong performance on Super Tuesday, Google searches on how to leave the U.S. and move to Canada surged. Of course, I love Canada -- I live here, after all -- but there are many other great places to live and have a very full life at a fraction of the cost of living in Canada. A couple of years ago, I went to the Dominican Republic to see whether it would be a good place for my family to spend the North American winter. It was a great experience, and the island has lots of development, and many Canadians and retirees from elsewhere live there.
There are many ways to preserve one's capital, such as moving somewhere cheaper. There are also ways to grow your capital substantially no matter what the economy does. I share some of them in the video on the home page of my Web site.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned. Chris Vermeulen is a full-time trader and research analyst for TheGoldAndOilGuy Newsletter.