We are looking at a shrinking US middle class. Proctor and Gamble, historically a company that sold products to middle class America, is changing their strategy to separately target high- and low-income consumers because they do not see the trend changing. Citigroup has created an index fund using this “hourglass” theme – companies that sell products to either high- or low-income households – and it has returned 56.5% since the fund’s beginning in December 2009 compared to 11% for the Dow. I am certain that the change started earlier but the signs were hidden in the housing bubble. Now with that bubble burst, the issue is more pronounced. I do not see anything to reverse this trend until after the 2012 election. I have no idea if we will elect someone to fix the problem then, so the loss of the US middle class may be the new NORMAL! What can we do to work with this new paradigm?

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