Economic Pinch Hits The Upper Middle-Class

A Normally Resilient Consumer Sector Is Having To Start Making Harder Choices About Spending

(CBS)  It's another sign of economic doldrums - Tiffany's, the jewel of the nation's luxury retailers, is loosing its luster. Holiday sales in its U.S. stores were disappointing.

Even though Tiffany's wealthiest customers continued to spend, with strong sales for 10 to 50-thousand dollars items, one important group, the mid-tier luxury consumer, held back on the 1-thousand to 10-thousand dollar purchases.

Candace Corlett's company, WSL Strategic Retail, monitors consumer spending. She spoke with CBS News correspondent Randall Pinkston and described the factors affecting these consumers' spending.

"This holiday season with the increasing mortgage rates, the increasing fuel prices," Corlett explained, "this upper tier shopper hit the wall."

Other high end retailers like Nordstroms, Saks and Coach were also down, joining JC Penny's, Macy's and Target, suggesting that shoppers across the board tightened their purse strings.

Retail analyst Steven Platt is seeing the impact of this trend.

"Between high debt levels, trouble in the real estate market, trouble in the stock market, deteriorating labor market, high energy prices - the consumer's spent," Platt said. "They have no place left to go but cut back."

Consumer spending, especially among the upper middle-class, normally keeps the economy ticking, but for the first time in years, that group is making hard choices.

"It's a new situation for them," Corlett noted. "They now have to choose whether it'll be the $1,500 flat screen TV or the $1,500 jewel from Tiffany, They can't buy both anymore."

With stock prices falling and energy costs rising, cutbacks in spending by wealthier consumers could put the final whammy on the economy's engine.

"We think the wheels are about ready to fall off the proverbial truck here," said Platt. "We think things are going to get a lot worse than better in the first quarter, first half of '08."

Pinkston reports that this is a view shared by many analysts. While everyone waits to see just how far the economy will fall, consumers across the board are becoming more nervous, and more careful, about where they spend their money.

"So for now, start gathering (or buying) seed packets of your favorite vegetables. Buy some soil and find a place to grow the vegetables. It will be the only guaranteed way to be able to eat and eat well (minus the poison/contamination)."


I''m not laughing. I''ve been growing some vegetables for the last 2 years, ride my bike locally, work from home and live off the grid.

Americans have been lazy, arrogant, selfish, ignorant and wasteful for far too long. If we get off our butts and starting thinking our way through this, we can survive the Bush Crash...

I''ve been saying it for the past 8 years and everybody laughed at me, including friends and family:

Bush the oil man who answers to big business and the elites stole the election and will drain your pockets dry and ruin America.

You prob''ly didn''t hear it from me, but the voices have been screaming at you for years and you ignored them.

Are you happy now?

[ov442]

The graph has shifted fast. The people that are making in range of 40-60k per year used to be doing just fine and now they have Very little money left to spend on luxuries.
The people making less than that ARENT making it. Period.
If it costs 55-65.00 every 4-5 days to fill the tank of an SUV or truck someone drives to work everyday, thats about $420 per month just in gas. Upper income families usually have bigger vehicles, bigger houses, and buy new clothes. Bigger houses have bigger payments and larger utility bills.
Not including ever increasing car and home and life and health insurance costs that most middle to upper income people have as well.
Poor people usually have very basic auto/home insurance, little health coverage, no life insurance, and skimp on utilities to try to get by. They buy clothes at the goodwill and salvation army stores, and they still feel that pinch with every dollar spent.
More republican policies, controls, cronyism and greed have made this the most divided country in history, divided by wealth/ lack of wealth, politically, idiologically, and power. The GOP does not live in a bubble, they know exactly what they are doing and they have done it on purpose.

[ov442]

I hate it when Economists uses phrases like "one important group, the mid-tier luxury consumer, held back on the 1-thousand to 10-thousand dollar purchases." or "suggesting that shoppers across the board tightened their purse strings."

As if theres plenty of money lying around for the general public but people are being miserly or cheap or something. What a bunch of Morons!

Sorry Economists, the fact is that the cost of living has gone up so far and so fast, that even people making upwards of 80-90k per year are feeling heat from expenses they dont normally have.
Their mindset from the beginning of their analysis is wrong and OFF before they even utter a word.

[usayesterday]

The scale of the "Economic Pinch" as based on annual income ranges...

Final thought:

In the end, only the wealthiest 1% will be able to survive a deep and long recession... and throughout this recession we now face, we will be constantly bombarded with bull ****** phrases to try and help us feel better.

But no matter how much we are told that "it''s not that bad", most Americans will still feel like the Coyote trying to eat the old shoe... convincing himself he''s eating the road-runner, but no matter how long he cooks it, or how much seasoning he puts on it...

...it''s still an old shoe.

[usayesterday]

(Part 2 of 2)

The scale of the "Economic Pinch" as based on annual income ranges:

$60k to $120k annual salary:
You are most likely college educated at this point, in an entry to mid-level "white collar" job or a very senior level "blue collar" job. Depending on where you live, you can either be considered as straight middle-class, or near the upper middle-class category. You job is not as expendable as your more entry-level colleagues, but it would be on the chopping block depending on how bad the economy gets. Nevertheless, you and your position in the company is not seen as an asset by most corporate executives, but rather... a liability. Thus, you are trash as well (in their eyes), but just slightly more valuable trash. In the end, you are not being "pinched", but more like slapped upside the head... repeatedly.

$120k to $250k annual salary:
You are most definitely college educated, and though your education got you your first job, it''s how you do in your first job which dictates where you go from there. You most likely have a more special skill set or specialized position in your company, but again, if the economy goes into a deep and long recession, you are just as expendable in the eyes of your company''s executive staff. You are having no problem in managing to maintain the traditional "American Dream". But if you''re lucky enough to be enjoying a higher-end lifestyle, the pinch you feel now could drastically change in a very short period of time.

[usayesterday]

The scale of the "Economic Pinch" as based on annual income ranges:

(Part 1 of 2):

Minimum wage up to $20k:
You are not only competing against the declining economy, but you are also competing against many illegal immigrants who would gladly take a job at minimum wage if the employer is willing to hire them (and many do). You are not being "pinched", you are being defecated on.

$20k to $60k annual salary:
You are either an entry-level worker in the corporate world to entry-level management, or at the more senior level in the service industry. Either way, you and your job are considered as expendable, throw-away trash among the corporate elites/executives. You are not being "pinched", you are being punched... in the face, and when you fall down... you get kicked in the balls, ribs, wherever it hurts the most.

(continued above)

[raised4952]

once again history repeats its self and we still havent enforced our borders.during the great depression there was to many illegall immigrants in the u.s.a

[observantx]

standlee5

The Congress is in the pockets of the credit and bank industry. They can do whatever they feel like it. There are no penalties, no process to charge them with anything. The drug, mortgage and even your trusted 401K administrator is bleeding us all slowly. The drops add up to a hefty bonus. These guys actually have thing tanks to develop new ways to screw us with the fine print.

The next congressman who warbles the wonders of the free market should be tarred and feathered for their hypocrisy.

[standlee5]

We have been so abused by the corporations of this country I don''t really care if any of them go under in fact I''d like to see them all fall. WE''d pick ourselves back up and start over. We always have and we always will.

[standlee5]

Regarding bank fees; wasn''t there a cap or limitaion on fees not too long ago. What is with these companies adding late fees of $30, $40 $50 for even one day late. And what about the city utilities adding 10% penalty for late fees. Then the bank has outrageous overdraft fees even when it''s tied to a line of credit. What''s that about. Where''s the regulation?

[mcv57]

Bend-over BMW yuppies, the Bushwacker wants some too.

[mcv57]

Bend-over yippies, the Bushwacker wants some too.

[observantx]

There is no free market in America.

Whatever candidate or politician starts chanting "free market this, and free market that" should be pelted with rotten vegetables or better yet rocks.

Make no mistake about it, the economy is rigged. Starting with Reagan all the regulations and oversight that kept corporations and industry nominally observing safe and truthful practices has been slyly and cynically gutted. The Federal Trade Commission that used to keep corporations from out and out lying about their products or practices is but a shadow of itself.

The banking and credit card industries have waged a stealth legislative campaign, eagerly passed into law by our "free market" apostles, that lets them change rates as they please, make up and apply fees for whatever they want, hide their permission and license to do whatever they wish in lines of near gibberish boilerplate. Did you know that almost all the time, if you agree to do business with them, somewhere in that very fine print, you agree to waive your right to sue? In the meantime we get milked very slyly and just a couple of bucks here and a couple of bucks there until it adds up to over 65 million bucks a year. The average person can easily be robbed of over a $1000 a year.

Get more details on this in a book I just started reading. "Gotcha Capitalism" by Bob Sullivan.

It proves there is no free market in this country. It''s a sham.

[usayesterday]

Free market economics is not the problem. What passes as free market economics in this country is nothing more than socialism for the rich.

Posted by jncc1701 at 06:36 PM : Jan 13, 2008
............

If what you say is true, then clearly, the term "free market" has been redefined by the Neo-Conservatives over the past two decades.

The U.S. is not a complete free market, in the classical lasaise faire sense. If we were, then there would be NO middle class left... Enron style scandals would be the order of the day, in fact, they wouldn''t even be considered scandals under the classical definition of lasaise faire capitalism, (or what is commonly called the free market economy).

The nature of greed in EVERY human, makes an absolute free market economy incompatible with the sustainability if not the advancement of humanity. We all need checks and balances, on those who govern us, as well as ourselves!

[jncc1701]

Free market economics is not the problem. What passes as free market economics in this country is nothing more than socialism for the rich.

[usayesterday]

Let''''s just say that we are often called "the world''''s largest chipmaker" and I''''m not talking about Lays...

Posted by omega39 at 06:21 PM : Jan 13, 2008
.........

Ah yes, I''ve done some work for them at the retail store level here in the Bay Area.

And you''re right... the sales and marketing departments have been cut and slashed just as much as any other department. They cut the retail level contractors to a skeleton crew (if that).

[omega39-2009]

Which company do you work for omega?

(If you are willing to divulge that info).

Posted by USAyesterday

Let''s just say that we are often called "the world''s largest chipmaker" and I''m not talking about Lays...

[omega39-2009]

...is a happy medium. What will it take to find that "happy medium" in this country? God only knows!

Posted by USAyesterday

Unfettered anything seems to be a bad idea. I think Capitalism needs a touch of socialism to keep it from consuming itself. Socialism needs an infusion of Capitalism to keep it from getting stagnant.

[usayesterday]

Posted by omega39 at 06:05 PM : Jan 13, 2008
.........

Which company do you work for omega?

(If you are willing to divulge that info).