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The Impact of the New Global Middle Class


Long-term global prospects remain bright. There is an emergence of a global middle class: consumers with enough income for food, clothing and shelter, plus discretionary purchases.

Today, the global middle class is about 1.8 billion strong and is projected to grow to 5 billion consumers by 2030, with $56 trillion in income to spend annually. That’s nearly three times as much as the middle class shells out today, according to The Kiplinger Letter.

This global middle class will want a higher standard of living: meatier diets, bigger houses, better hygiene … air conditioners, electronics and cosmetics.

This middle class will also demand more from governments: better access to health care, clean water, sewers, improved roads and schools.

This spells opportunity for U.S. businesses in consumer and business goods, as well as insurance, consulting, financial services, medical, engineering and architecture. As well, tourism will increase all over the world.

Today, Americans account for about 20% of all global middle-class spending. By 2030, American middle-class spending is projected to be just 8%. Measured globally, the U.S. middle-class population is projected to decline from 12% today to just 4% in 2030.

This global growth in the middle class also will be challenging to all of us. Accommodating cultural differences in packaging, marketing and ingredients—the race to reach this mass of new customers is on. American companies have brand names known worldwide.

In spite of our current economic challenges, there is reason to hope for the future. Challenges and short-term volatility will remain. But investors who diversify in domestic and international companies are likely to earn respectable long-term returns if they are patient and disciplined.

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