There are few better barometers of the falling standard of living across the country than reports such as this one at that matches a decrease in sales at budget chains such as Wal-Mart and Target against increased sales at dollar stores, the next rung down the retail ladder.

What does it mean?

The economic middle class continues to slide into the lower economic class, according to CNN:

With the economy recovering at only a snail’s pace, consumers are still feeling pinched and are on the hunt for the best bargains. For many, that now means shopping at dollar stores.

“Massive unemployment and declining wages are squeezing people out of the middle class,” said Kristin Bentz, executive director at private equity firm PMG Venture Group. “These people can’t even afford Wal-Mart now and are trading down to dollar stores.”

Hiring might have picked up, according to the latest federal jobs figures, but the new jobs aren’t like the old jobs, and that has affected how consumers spend money.

Dollar stores are taking advantage of their new customers and expanding their offerings, including more brand name products and foods like meats, fruits, vegetables, milk and eggs, said Bentz, who is also president of Talented Blonde, an advisory firm focused on the consumer and retail industry.

Dollar Tree is rolling out freezers and coolers at a faster pace, and is on pace to install them in 550 stores by the end of the year.

“This category serves the current needs of our customers, drives traffic into our stores and provides incremental sales across all categories including our higher margin discretionary product,” said Dollar Tree CEO Bob Sasser during the company’s earnings call in August.

For New York Times columnist Paul Krugman, the persistence of the “mutilated economy” is an indictment of our politics, national priorities and our federal policies:

These dry numbers translate into millions of human tragedies — homes lost, careers destroyed, young people who can’t get their lives started. And many people have pleaded all along for policies that put job creation front and center. Their pleas have, however, been drowned out by the voices of conventional prudence. We can’t spend more money on jobs, say these voices, because that would mean more debt. We can’t even hire unemployed workers and put idle savings to work building roads, tunnels, schools. Never mind the short run, we have to think about the future!

The bitter irony, then, is that it turns out that by failing to address unemployment, we have, in fact, been sacrificing the future, too. What passes these days for sound policy is in fact a form of economic self-mutilation, which will cripple America for many years to come. Or so say researchers from the Federal Reserve, and I’m sorry to say that I believe them.

So what happens to people at the bottom of that mutilated economy? We cut what few lifelines they have, as The New York Times reports in a sobering look at the effect of the recent reduction in food stamp programs — with more cuts looming on the horizon. The Times offers an example:

Ingrid Mock, 46, a former supermarket cashier who is disabled, was at the Bronx food pantry on Monday stocking up on canned green beans, pasta, ground beef and apples.

Ms. Mock, who has received food benefits for a decade and uses them to help feed her 12-year-old daughter, said her allotment had steadily decreased from as much as $309 about six years ago to a low of $250 this month, which reflected a new cut of $25.

Meanwhile, the price of staples like rice and corn oil have increased. So this month Ms. Mock will make choices. One dozen eggs instead of three, and only $1 worth of plantains. And no coffee or sugar for herself.

“I try to get most of the things my daughter eats because I can hold the hunger — I’m an adult — but she cannot,” she said. “They don’t understand when there’s no food in the fridge.”

—Posted by Scott Martelle


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