Bloomberg Businessweek writes that "one of the most economically significant trends of the past few decades has been the emergence of a global middle class. The expectation that this cohort of consumers would continue to grow relentlessly, as rising incomes in developing countries lifted millions out of poverty each year, has been a central assumption in multinationals’ business plans and the portfolio strategies of professional investors.
"You can now add that to the list of economic truths that have been upended by this pandemic. For the first time since the 1990s, the global middle class shrank last year, according to a recent Pew Research Center estimate. About 150 million people - a number equal to the populations of the U.K. and Germany combined - tumbled down the socioeconomic ladder in 2020, with South Asia and sub-Saharan Africa seeing the biggest declines."
The story goes on:
"Pew’s middle-income and upper-middle-income brackets encompass roughly 2.5 billion people—or a third of the world’s population. Buried inside these big numbers are many personal stories. Here we bring you four, from India, Brazil, South Africa, and Thailand. They’re tales of hard-won successes that evaporated overnight, along with well-paying jobs. Of once-accessible luxuries, like steak for dinner or home internet access, now out of reach. Of dreams deferred, whether an automobile or an apartment."
You can read the entire piece here.
- KC's View:
What's really sobering about this story's implications is how many businesses have been created to cater to the middle class, and to appeal to now-crushed aspirations.
There's a sentence in the story that I can't quite forget: "Strivers face a far more uncertain future than in years past." The issue is how deep the damage is, how long it will last, and what can be done to rectify the situation.