Including household income categories over $200,000 and examining the change in the proportional share of real income across households between 2012 and 2015 tells an even more striking story. As can be seen in Exhibit 8,
the cumulative proportional share of real income lost by lower income households bottoms out
at over 6% at the $100,000- 105,000 level. Categories between $105,000 and $200,000 gain back almost 2%, and the remaining just under 4% has been gained
by households earning more than $200,000 (1.2% by those between $200- 250,000, and 2.9% by those over $250,000 per year).
What these statistics tell us overall is that the real purchasing power of the traditional middle market retail cohort--those who would normally shop at places like Kohl’s, Dillards, Bon-Ton, Sears, and JC Penney—has fallen. Further exacerbating
this trend is the fact that an increasing number of higher income shoppers are purchasing online instead of on-ground.
The demographic shifts explain why retailers at the high and low end have been growing while those in the middle ranks have been thinning. There are no indications that these patterns
will change anytime soon. Economic growth continues to be flat; wages are growing at high rates in the higher income categories, and much lower rates in the lower income categories, which will only serve to make the situation worse, not better. Expect to see more financial distress and restructuring
in the middle market of the retail industry. Even J.W. Nordstrom, long considered to be a higher end retailer, is now considering a taken private transaction to get out from under the scrutiny of the public equity markets as sales growth and margins tighten.
  $300,000,000.00
$250,000,000.00
$200,000,000.00
$150,000,000.00
$100,000,000.00
$50,000,000.00
$-
Under $5,000
$35,000 to $39,999
total Income 2012
$105,000 to $109,999
Total Income Adjusted 2015
$175,000 to $179,999
Exhibit 7
Total Income Per Income Category: 2012 and 2015 Adjusted for Inflation from 2012: Income Categories from Under $5,000 to $200,000
        $70,000 to $74,999
$140,000 to $144,999
     0.00% -1.00% -2.00% -3.00% -4.00% -5.00% -6.00%
-7.00%
Under $5,000
$50,000 to $54,999
$100,000 to $104,999
$150,000 to $154,999
$200,000 to $249,999
Exhibit 8
Cumulative Change in Share of Real Income (Percentage of Total Household Income) and Cumulative Change in Distribution of Households: 2015-2012
         Diff Cum PCT Num 2015-2012 Diff Cum PCT Total Income Adj 2015-2012
  6
©2017 Credit Research Foundation
Consumer Debt Trends
An earlier study conducted by this author demonstrated the important role played by consumer credit in the growth of the post World War II consumer economy, in particular the role of revolving credit beginning in the mid-1990s. Growth in U.S. consumption expenditures has,
in those time periods, been heavily supported
by the availability and use of consumer credit.
As can be seen in Exhibit 9, both the use of revolving and non-revolving forms of consumer credit picked up speed in the mid-1990s, peaking just prior to the collapse of the credit markets in
Axis Title
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