Guest Post: 16 Signs That The Middle Class Is Running Out Of Money

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

Is "discretionary income" rapidly becoming a thing of the past for most American families?  Right now, there are a lot of signs that we are on the verge of a nightmarish consumer spending drought.  Incomes are down, taxes are up, many large retail chains are deeply struggling because of the lack of customers, and at this point nearly a quarter of all Americans have more credit card debt than money in the bank.  Considering the fact that consumer spending is such a large percentage of the U.S. economy, that is very bad news.  How will we ever have a sustained economic recovery if consumers don't have much money to spend?  Well, the truth is that we aren't ever going to have a sustained economic recovery.  In fact, this debt-fueled bubble of false hope that we are experiencing right now is as good as things are going to get.  Things are going to go downhill from here, and if you think that consumer spending is bad now, just wait until you see what happens over the next several years.

Even though the Dow is surging toward a record high right now, everyone knows that things are not good for the middle class.  A recent quote from CPA Howard Dvorkin kind of summarizes our current state of affairs very nicely...

"The fact of the matter is that America is broke — whether it's mortgages, student loans or credit cards, we are broke. The old rule of thumb is that people should have six months' of savings," Dvorkin says."If you talk to people, most don't have two pennies."

These days most Americans are living from paycheck to paycheck, and thanks to rising prices and rising taxes, those paychecks are getting squeezed tighter and tighter.  Many families have had to cut back on unnecessary expenses, and some families no longer have any discretionary income at all.

The following are 16 signs that the middle class is rapidly running out of money...

#1 According to one brand new survey, 24 percent of all Americans have more credit card debt than money in the bank.

#2 J.C. Penney was once an unstoppable retail powerhouse, but now J.C. Penney has just posted its lowest annual retail sales in more than 20 years...

J.C. Penney Co. (JCP) slid the most in more than three decades after the department-store chain lost $4.3 billion in sales in the first year of Chief Executive Officer Ron Johnson’s turnaround plan.

The shares fell 18 percent to $17.40 at 11:28 a.m. in New York after earlier declining 22 percent, the biggest intraday drop since at least 1980, according to data compiled by Bloomberg. J.C. Penney yesterday said its net loss in the quarter ended Feb. 2 widened to $552 million from $87 million a year earlier. The Plano, Texas-based retailer’s annual revenue slid 25 percent to $13 billion, the lowest since at least 1987.

How much worse can things get?  At this point the decline has become so steep for J.C. Penney that Jim Cramer of CNBC is declaring that they are in "a true tailspin".

#3 In the United States today, a new car has become out of reach for most middle class Americans according to the 2013 Car Affordability Study...

Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.

The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales. According to the 2013 Car Affordability Study by, only in Washington could the typical household swing the payments, the median income there running $86,680 a year.

#4 The founder of Subway Restaurants, Fred Deluca, says that the recent tax increases are having a noticeable impact on his business...

"The payroll tax is affecting sales. It's causing sales declines," he said, estimating a decline of about 2 percentage points off sales at his restaurants. "There are a lot of pressures on consumers," Deluca said, adding "I think this is on the permanent side, but I think business will adjust to it."

#5 Many other large restaurant chains are also struggling in this tough economic environment...

Darden Restaurants, which owns the casual dining chains Oliver Garden, LongHorn Steakhouse and Red Lobster, said blended same-store sales at its three eateries would be 4.5 percent lower during its fiscal third quarter.

Clarence Otis, Darden's chairman and chief executive, said that "while results midway through the third quarter were encouraging, there were difficult macro-economic headwinds during the last month of the quarter."

"Two of the most prominent were increased payroll taxes and rising gasoline prices, which together put meaningful pressure on the discretionary purchasing power of our guests," he added.

#6 The CFO of Family Dollar recently admitted to CNBC that this is a "challenging time" because of reduced consumer spending...

At Family Dollar where the average customer makes less than $40,000 a year, the combination of a two-percent hike in the payroll tax, rising gas prices and delayed tax refunds has created a "challenging time and an uncertain time for the consumer right now," said Mary Winston, the company's chief financial officer.

"In our case, anything that takes money out of our customer's wallet gives them less money to spend in our stores," she told CNBC. "So I think all of those things create nervousness for the consumer, and I think there are sometimes political dynamics going on that they might not even fully understand the details, but they know it's not good."

#7 Even Wal-Mart is really struggling right now.  According to a recent Bloomberg article, Wal-Mart is struggling "to restock store shelves as U.S. sales slump"...

Evelin Cruz, a department manager at the Wal-Mart Supercenter in Pico Rivera, California, said Simon’s comments from the officers’ meeting were “dead on.”

“There are gaps where merchandise is missing,” Cruz said in a telephone interview. “We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business.”

This all comes on the heels of an internal Wal-Mart memo that was leaked to the press earlier this month that described February sales as a "total disaster".

#8 Electronics retailer Best Buy continues to struggle mightily.  Best Buy just announced that it will be eliminating 400 jobs at its headquarters in Richfield, Minnesota.

#9 It is being projected that many of the largest retail chains in America, including Best Buy, will close down hundreds of stores during 2013.  The following is a list of projected store closings for 2013 that I included in a previous article...

Best Buy

Forecast store closings: 200 to 250

Sears Holding Corp.

Forecast store closings: Kmart 175 to 225, Sears 100 to 125

J.C. Penney

Forecast store closings: 300 to 350

Office Depot

Forecast store closings: 125 to 150

Barnes & Noble

Forecast store closings: 190 to 240, per company comments


Forecast store closings: 500 to 600


Forecast store closings: 150 to 175


Forecast store closings: 450 to 550

#10 Another sign that consumer spending is slowing down is the fact that less stuff is being moved around in our economy.   As I have mentioned previously, freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.

#11 Many young adults have no discretionary income to spend because they are absolutely drowning in student loan debt.  According to the New York Federal Reserve, student loan debt nearly tripled between 2004 and 2012.

#12 The student loan delinquency rate in the United States is now at an all-time high.  It is only a matter of time before the student loan debt bubble bursts.

#13 Due to a lack of jobs and high levels of debt, poverty among young adults in America is absolutely exploding.  Today, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.

#14 According to one recent survey, 62 percent of all middle class Americans say that they have had to reduce household spending over the past year.

#15 Median household income in the United States has fallen for four consecutive years.  Overall, it has declined by more than $4000 during that time span.

#16 According to the U.S. Census Bureau, the middle class is currently taking home a smaller share of the overall income pie than has ever been recorded before.

Are you starting to get the picture?

Retailers are desperate for sales, but you can't squeeze blood out of a rock.

For much more on how the middle class is absolutely drowning in debt, please see this article: "Money Is A Form Of Social Control And Most Americans Are Debt Slaves".

But if you listen to the mainstream media, they would have you believe that happy days are here again.

Right now, everyone seems to be quite giddy about the fact that the Dow is marching toward an all-time high.  And I actually do believe that the Dow will blow right past it.  In fact, it is even possible that we could see the Dow hit 15,000 before everything starts falling apart.

But at some point, the financial markets will catch up with economic reality.  It is just a matter of time.

In the meanwhile, those that are wise are taking advantage of these times of plenty to prepare for the great economic drought that is coming.

Don't be caught living paycheck to paycheck and totally unprepared when the next wave of the economic collapse strikes.  Anyone that believes that this debt-fueled bubble of false hope can last indefinitely is just being delusional.

During The Years Of Plenty, Prepare For The Years Of Drought - Photo Taken By Tomas Castelazo

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localsavage's picture

The Muppets are broke

Stackers's picture

I've also noticed Lowes and Home Depot are getting very bad on restocking empty items. I thought it was just lazy store up keep - seems to be a bigger problem though.

akak's picture

I've been seeing that in MANY different kinds of stores, from clothing to grocery to auto parts.  WalMarts in Alaska have been abominably bad in that respect for years, which is partially why I decided to boycott their temples to consumerist mediocrity over a decade ago.

Richard Chesler's picture

When Obozo said he was gonna "take care" of the middle class, it wasn't just political pandering.

The Juggernaut's picture


Helicopter:  $5,000

Money in a sack:  $100,000,000,000,000,000

The value of the US dollar once Bernuckle is finished emptying his money sack:  Priceless (Worthless)


AlaricBalth's picture

Meanwhile, on the other side of the sister, who is the a store manager at Saks Fifth Ave. in Bal Harbour, Fl. tells me that the store has seen record sales, especially the higher end couture designer department. She says many of the customers are the wives of wealthy NY bankers and Russian oligarchs with their 20 year old toys of the week.

Just more evidence that our economy is polarizing at a more rapid rate due to cronyism and a political class that acts as the bitches to the rich.

Smegley Wanxalot's picture

If the rich have to lower themselves to shopping at Saks, things are seriously getting bad.

TruthInSunshine's picture

I never understood the appeal of Bal Harbour. It's full of old, out of touch people, like Bob Dole (who has high rise condo there), is surrounded by concrete rather than the kind or amount of beachfront one would associate with the ocean (Sunny Isles & Marco Island are similar 'let's build a vertical shitload of units with "water view or partial water view" condos' concrete & steel shitholes), and Hasdidic dudes wearing all black wool coats, pants and hats in 97 degree heat with 85% humidity.

geno-econ's picture

That condo was a special deal offered Bob Dole by Archer Midland Daniels. Wonder why ? Think corn /fructose subsidies. The entire complex is filled with takers while taxpayers and consumers are getting fat on fructose and ripped off buying ethanol blend gasoline.

Freddie's picture


AMD also = Illinois. 


post turtle saver's picture

C'mon guys, it's Archer Daniels Midland... ADM, Supermarket to the World bitchez

long jatropha

TruthInSunshine's picture

I mispelled "Hasidic" in my post above. If you're a Hasidic Jew, my apologies.**

I also meant Normandy Isles, and not Marco Island (although Marco Island is also a concrete saturated, beach starved, vertically built, condo wasteland, also), above.

I used to travel to Florida A LOT when many of the 1 1/2% to 3% were flush, but many of these formerly flush people since went bust (I think many even here on ZH would be surprised at the massive damage that was done to many people that had 8 and even 9 figure net worth- at least on paper at one time), hence I don't travel there often now (why would anyone travel to nearly any part of Florida voluntarily? Humidity, giant ass bugs & gangs...).


**Hasidic Jews dress somewhat like the Amish, purportedly.  I know this purported fact because I overheard a conversation at a local pub where someone was discussing a cable show apparently entitled "Amish Mafia."

Freddie's picture

Bob Dole is a midwestern goyim - you won't see many Bob Dole's in Bal Harbour.Probably just Bob Dole.

I used to go down there 20+ years ago.  It has been shitty for 50 years.  Miami has always been crap and the people make it even more unpleasant.  It is an upscale version of the Bronx or Williamsburg Brooklyn. The Russian gangsters are all over Miami Beach up to North Miami Beach.  I knew a Ukrainian named Olga from  there.  LOL!

Marco Island is on the west coast of FL with midwesterners so the people are nicer but the gulf side ocean is shitty. West Coast of FL is even more humid and swampy.

I am glad I live in Shitville - 1500 miles away from those places.

chubbyjjfong's picture

Agreed. The rich and elite, holding the majority of the wealth, will deleverage into high end assets at an increasing pace. Their increased buying will be heralded as evidence of a healthy economy all the while the middle class will become poorer and poorer. 

TheProphet's picture

I live about four miles from NorthPark Mall, the largest mall in Texas, which features all high end retailers like Nieman Marcus and Nordstrom.

One, the massive parking lots were filled to the brim this afternoon. Two, over at the valet station, it looked like the lot of a german car dealership.

These are the people who have accumulated capital, and are exactly the people who get richer so long as the Fed prints money.

americanspirit's picture

Funny thing is - there is nothing at NorthPark Mall worth spending money on. People in Dallas who have money have no taste - never have had, never will have. My wife and I went to a print exhibit at the McNay in San Antonio this afternoon. Among the 20 or so national dealers there was one from Dallas. All the rest had great prints - classical through modern. All the great names. As we looked at the Dallas gallery's display my wife ( 5th generation North Texas) said - every single print here would look great in the hallway to the master bath in a Plano MacMansion. I had to add - or in a Holiday Inn. Really - they were showing the kind of stuff you expect in a third-rate antique mall. That's Dallas.

willwork4food's picture

I'm going out on a limb here, but I assume you aren't a Cowboy fan?

Karlus's picture

NorthPark is always packed, but you need to count the number of people with bags. It is indeed a destination as much as a retail outlet.


That said, North Dallas (with the exception of JCP) is still doing well relatively speaking. Its pretty low cost to live here and quality of live is head and shoulders above what you can do in any Northeast or Cali hell hole. Houses are still being built (and sold) and there is still hiring.


Come on down, we would love to have you

Montecarlo's picture

Yeah - and over here in Southlake they keep building more high end retail to over-serve a very small group of affluent buyers. Since I don't shop I don't need to get over to Dallas much. I'm much more at home in Fort Worth...

masterinchancery's picture

Bye bye middle class, nice knowing you--can't believe what stupid voters you are, though.

LongBallsShortBrains's picture

It is a simple and obscure truth that we end up where our decisions take us...

RichardP's picture

We also end up where other people's decisions take us.  Ever been in an auto accident that wasn't your fault?  Ever been born when you had no say in the matter?

new game's picture

really simple shit being discussed here-shit we used to produce here has left the country. comes right back on the cheaper-imagine that.

to change that, well that is what 9/10 of z.h. posts address- with the ROOT of the issue being facsism...

wtf can we do, wel we know, but we are a minority for now, that will change, but unfortunately, by that point in time it will be too late.

kinda like buying gold....

SF beatnik's picture

You actually think voting affects economic policy?

TheObsoleteMan's picture

As anyone who has ever studied Communism/Marxism can tell you, it is not the uber rich who are the enemies of the Party: it is the middle class. Obama is just following the plan set forth many decades ago. It is all but complete now, I don't believe things could be reversed even if there were any political will to do so, and believe me, there is not.

j0nx's picture

Agreed on this. Walmart where I live has been bad like this for a few months now. ALWAYS out of everything I want or need. No real reason to go there now with the ammo shelf full of nothing but lint and mothballs.

Wile-E-Coyote's picture

Agreed I went to Walmart, all the nuclear weapons were sold out what a fucking disgrace.

zerozulu's picture

In the Walmart near me, I see nothing but drones.

GeezerGeek's picture

Are you saying that the company that soared on 'just in time' inventory supply chain has switched to a 'just a little bit late' mode? I could see stocking less of everything not having a high turnover rate, but you can't sell what you don't stock, which means no profit at all. Were the empty shelves dedicated to items that moved too slowly to be profitable, even as loss leaders?

countrygal's picture

It is common for stores not to be stocked well this time of year since so many are getting ready to do inventory. 

adr's picture

Inventory is over. Nearly every retailer has thier fiscal year end in January. March 1st is the summer inventory kickoff. If the shelves aren't stocked in February, they aren't going to be stocked.

My order from a major retailer was 1/4th what it was last year.

TruthInSunshine's picture

adr, are you familiar/have you ever attended the International Council of Shopping Centers convention in Vegas?

The last time I went, I'd estimate there were rougly 70% fewer attendees than in 2005 or 2006.  It was depressing.

Even the former legendary parties surrounding the convention were just pitiful.

Miss Expectations's picture

With decreased sales, NO ONE wants to hold an extra molecule of inventory.  Operating with extremely low inventories will inevitably result in at least some out of stocks, particularly when the entire supply chain is doing the same thing.  I believe that WalMart pushed their inventories way to low and out of stocks were the result.  Forcasting meetings were always the most stressful of all the meetings I attended.  If your forecast was too high, you had excess inventory (BAD).  If you forecast too low, you had out of stocks (REALLY BAD).  The only good forecast was a perfect forecast (RARE EVENT).

Skateboarder's picture

When the kite string pops, imagine a jillion interlaced tape measures all trying to retract at once. That is the global supply chain. Lead times get compounded yo!

CPL's picture

That would be true if the prices remained static, but in an inflationary environment warehousing allows a company to literally spend now to PROFIT later.  

Your example is true though, in a good business environment when energy is cheap, holding inventory is a rediculious idea.  You can just go get more...that's not the case today though is it?

In a expensive energy, rising price situation, you WANT to have items to follow the trend of inflation to keep a float.While the reasoning is sound, the business angle is not.  I'm sure there are items you have in the house and use for months to hedge rising costs.

IrritableBowels's picture


IIRC, adr mentioned exactly this very phenomena a few months ago, around Black Friday Week.

Miffed Microbiologist's picture

I may be wrong but I thought big named vendors like Coke stocked their merchandise at Walmart. Walmart provides them the sales of each store and they adjust each store accordingly. So if sales slump in Arizona but are strong in Oregon, they know where to send their advertising through this data mining. So if true, are the big name vendors lowering their inventories? So does it just look like Walmart has a problem when the problem may be bigger and more widespread? I haven't been to Walmart in a long time, I think I check it out and see if all inventory is down or only select items. I guess that means I have to walk through Walmart. May be I have a drink before I go. Walmart is just so depressing.


El Crusty's picture

at walmart the hourly employees are the ones that stock the shelves. when i worked there not all that long ago i never ever saw a vendor stocking shelves.

TheObsoleteMan's picture

If you go to Walmart, skip the drink and pack a pistol. Crime stats show that a Walmart parking lot is one of the most dangerous places one could be at. Inside the store isn't that much better either.

WhiskeyTangoFoxtrot's picture

Words to live by. Several concealed carriers have stopped shootings at Wal-Marts in and around my city in the last several years. Definitely skip the drink and pack. Then again, where I'm from, everyone packs. It's not uncommon to see a mom waiting the the pharmacy line with a kid on one hip and an open carried pistol on the other. 

mkkby's picture

And yet, none of these struggling dinosaurs are lowering their prices.  So I hope they go out of business.  God riddance to them.  Online is the only way to get any selection any way.

CPL's picture

It is a bigger problem.  All the chain retailers that are relying on JIT systems are starving for products that will simply never come.  Baltic dry index tell more than retail shipments, it's a direct reflection of energy and food supply chains for many countries.

Skateboarder's picture

Praise be to jah, you turned a rasta!

TruthInSunshine's picture

CPL, the example of "accurate information indicators" you cite is along the same line of reasoning I love electricity rate usage.

The statistical con artists at governmental, federal reserve-related/sponsored and business/industry association agencies can't spin such things.

francis_sawyer's picture



yuh needin talkin wit stile tat


Don’t bother yourself with singular or plurals. They’re all interchangeable. Memorize the word that appeals to you the most in each category and stick with it.

  • I, Me – ah, me, mi, we, awi
  • You, your – yuh, ayu, allyuh
  • They, she, he – e, he, she, im, de, dem, aledem
Grammatical rules (in order of increasing difficulty) Rule 1

End words with ‘in’ instead of ‘ing’.

Cookin. Talkin. Walkin. Childs play.

Rule 2

Replace ‘th’ with ‘d’. Drop the ‘th’ if this rule is too complicated.

‘The’ becomes ‘de or just ‘e’. Whatever makes you happy.

Rule 3

Insert ‘ah’ at the beginning of your sentence to buy you time to think.
Ah wah dah – what’s that?

Ah whey yuh bin – where’ve you been?

Rule 4

Repeat adjectives for emphasis.

Dis wata de cold cold – This water is very cold.

Rule 5

Replace ‘er’ with ‘a’.

Butter would become butta. You might’ve realized I said ‘wata’ in my last rule. Tricky.

Rule 6

Drop h’s at your own discretion.

Maths would become mats and him would be ‘im. I’ll make no false claims and admit that I’m still in the process of internalizing this rule.

Rule 7

If you’ve gotten this far, the world is your playground. Improvise at will.
‘I told him’ can be

  • I tol him
  • I told ‘im
  • I tell ‘im
  • Ah tell e
  • I tell e
  • Me tell em
  • And so on and so forth.
GeezerGeek's picture

I must be missing something. If the BDI is down it would seem that goods are not getting produced, which could be for lack of orders or too many orders. Are the JIT retailers not placing orders to get goods (mostly from China I assume)? Or are the manufacturing sites too busy to respond in a timely fashion? That does not seem likely. So which is it? 

Maybe all the Walmart shoppers simply went upscale. How is Nieman Marcus doing?

CPL's picture

See that's the strange part, now it just doesn't matter if JC Penny sells another country's production.  Remember economies of scale follow by location.  A million dollars in somewhere like Jamacia buys you more labour than it would in the US.

Last 50 years have been dotted with crooks that steal a couple of million and hide somewhere to never return.  Scale is the feature here.  For China it was a position of no option but "up", I have no idea what did it, but it lit a fire under their ass.  

The place was still somewhat habitable in the 70's but obviously someone changed that script pretty fast.  It had a one child policy that was working, then it turned semi capitalist and more thievery/graft based plus everyone went bare back.  

Look at it now, complete mess waiting for the next loon to slide in the chair.  Chinese civil wars aren't something the world needs but it's coming regardless of anyone's intentions and effects to the contrary.  The middle kingdom once it gets rolling internally, watch out.

Cathartes Aura's picture

key words:  Nixon, gold standard, Kissinger, Rockefeller

that would be the shorthand for "someone changed that script pretty fast" - the new farmers moved in on their live-stock and began the SOS, patterns that appear to "work" for "them" every time.

of course, there will be the fallow field decades too, for some land-scapes.

I realise you know this.