January 15, 2014

In September 2013 the Census Bureau reported middle-class incomes have continued to decline during the current economic recovery. Forty-five years ago (1968), the middle 60% of households earned 53.2% of national income. Now, they earn 45.7%. The decline of middle-class buying power is not just academic; it is a big reason why there are simply fewer people that can afford your product or service… why it’s harder to make a profit in a small business, than in 1968.

What about “trickle-down economics,” the belief that more money to people on the top stimulates overall growth of the economy? It just hasn’t proven to work. Why? Perhaps it is because the 1% can always find new places to spend their money. Case in point: There is a growing demand for high-performance cars priced at $138,000 or more.  “Extreme (cars are) growing in volume and price,” said analyst Michael Gartside. “People want more exclusivity. Something others don’t have.” The newest entry in this market is Lamborghini’s new electric Huracan, the Spanish word for hurricane, which will fight it out with traditional rival Ferrari and Aston Martin. Now, this is a small market, only 15,000 super cars were sold in 2012, but it is a growing market. Lamborghini and other luxury car manufacturers have all announced plans to expand into sport-utility vehicles, a segment that has been growing fast.

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