Pinching pennies and buying dollars

Posted: 19 August 2014 in Uncategorized
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Of course, there’s a bidding war for Family Dollar Stores, one of the country’s biggest deep-discount retailers!

According to Richard W. Dreiling, Dollar General’s chairman and chief executive,

“It’s fair to say that the economy is creating more of our core customers,” he said. “The middle-income customer is getting squeezed.”

Dreiling’s view is confirmed by the latest report on household income trends from Sentier Research [pdf]. Their Household Income Index shows the value of real median annual household income in any given month as a percent of the base value at the beginning of the last decade (January 2000 = 100.0 percent). As readers can see in the chart above (red line), the index for June 2014 stood at 94.1 compared to 98.8 in December 2007, when the “great recession” began, and 97.0 in June 2009, when the “economic recovery” supposedly began. The index had increased unevely from August 2011 (the low point) to this summer.

What does it mean? In short, it means that average American households have been beaten down—and therefore have been forced to pinch pennies by purchasing at discount retail stores like Family Dollar, Dollar Tree, and Dollar General—and that their incomes, while far below their peak, have in fact been rising over the last few years—which means they are able to spend more of their pennies at those same discount retailers.

Clearly, as I’ve argued before, “there’s a lot of profit to be made in selling discount commodities to the low-income and falling-income American families whose numbers have grown over the course of the past three decades, and especially in the midst of the Second Great Depression.”

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