One of the more profitable PowerTrends that subscribers to PowerTrend Profits have benefited from, and continue to benefit from, is The Rise and Fall of the Middle Class. The Rise of the Middle Class refers to the rising disposable incomes in several markets around the world, particularly the emerging markets. As those incomes rise, many are trading up in lifestyle, which drives additional demand for goods and services. You’re seeing that now every time you walk into your local grocery store, given the spike in beef, pork, coffee and other prices.
The flipside of that PowerTrend is the Fall of the Middle Class, and that, sadly, is happening here at home in the United States. Am I happy about it? Certainly not, but the data is what the data is, and that means we as investors need to re-calibrate where we are investing.
According to the latest from Gallup, the payroll to population as of March registered at 42.7%. That alone should get you to second-guess the unemployment rate, but what it doesn’t tell you is that your dollars are not going as far. In the fourth quarter of last year, median weekly earnings of the nation's 104.8 million full-time wage and salary workers were $786. Here’s the good news -- according to the U.S. Bureau of Labor Statistics, that figure rose 1.5% compared to the fourth quarter of 2012.
Now here’s the bad news -- the Consumer Price Index (CPI) rose 1.7% during the same time frame. That means you may be making more money, but your spending power has declined -- you are buying less with more money.
That was the end of 2013, and I’m sad to say the situation has only gotten worse. Wage growth, per the Labor Department’s monthly employment reports, has essentially stagnated, while the prices for gasoline, beef, pork, cocoa, coffee and others have climbed. Not only have gas prices climbed, but they are now higher than they were a year ago. Meanwhile, beef prices are at an all-time high, and companies like Chipotle Mexican Grille (CMG) and others are responding with price increases. As we navigate further into the current earnings season, I expect we will be hearing more of this.
Chris Versace is the editor of PowerTrend Brief — a FREE, weekly electronic newsletter. He also writes PowerTrend Profits, a paid monthly newsletter that helps individual investors profit through buying shares of companies poised to win big in the 8 PowerTrends, as well as writes the PowerTrader trading service that seeks to deliver short-term gains using stocks, ETFs and options. Chris has been ranked an All Star Analyst by Zacks Investment Research.