Economy Watch: World’s Middle Class to Expand Mightily by 2030
- Mar 18, 2013
The middle class in the developing world will indeed be developing quite rapidly in the next two decades, according to the United Nation’s Human Development Report 2013. The report, this year called “The Rise of the South: Human Progress in a Diverse World,” was released late last week. The UN’s use of “South” in this case refers to developing nations globally, regardless of their precise geographical location. The Human Development Report, released annually by the UN Development Programme, assesses the state of human development on the basis of health, education and income indicators.
The report predicts that by 2025, 1 billion households worldwide will have incomes in excess of $20,000 a year, and about 60 percent of those households will be in what are now termed “developing” countries. By 2030, the global middle class will total 3.2 billion people, compared with 1.8 billion in 1990. Moreover, more than half of the 2030 total will be in the Asia-Pacific region, which represents a major shift from the late 20th century, when Western Europe and the United States had a majority of the world’s middle class, with Japan as the sole Asian nation to have a substantial middle class.
By the end of this decade, the report forecasted that the combined economic output of Brazil, China and India—which are on the leading edge of middle-class growth—will exceed the economic output of the United States, Germany, the U.K., France, Italy and Canada put together. Not only that, formerly poor countries are trading with one another at a faster clip than ever, a trend that’s expected to continue. Trade among developing nations represented less than 10 percent of all global trade in 1980; by 2010, their trade was more than a quarter of the world’s total.
CPI sees February uptick because of gas
The Bureau of Labor Statistics reported on Friday that its Consumer Price Index increased 0.7 percent in February, a sharp increase compared with January, when the CPI was unchanged. Over the last 12 months, however, the index increased only 2 percent, exactly the Fed’s target rate for inflation.
Gasoline was responsible for most of the monthly increase. The gasoline index rose 9.1 percent in February month-over-month to account for almost three-fourths of the overall CPI increase. The indexes for electricity, natural gas, and fuel oil also increased, leading to a 5.4 percent rise in the energy index for the month. The food index increased only slightly in February, rising 0.1 percent.
Take food and energy out of the consumer-price equation—to reveal the “core” rate of inflation—and the increase was only 0.2 percent for the month. Prices for shelter, used cars and trucks, recreation, and medical care all rose in February, but those increases were more than offset by declines for new vehicles, apparel, airline fares and tobacco.
Consumer sentiment slides in February
Though they’re spending more, U.S. consumers were a bit grumpier in March than February. The preliminary Reuters/University of Michigan preliminary consumer sentiment index for March declined from 77.6 in February to 71.8 in January, its lowest level in more than a year.
According to Reuters, about a third of the survey respondents cited federal government economic policies—or rather, the gridlock that’s producing no clear policies—as a factor in their lowered sentiment. Gas prices didn’t help either. Consumers were more pessimistic about both the direction of the economy, as well as their own finances.
Wall Street’s winning streak was at last broken on Friday, though it wasn’t much of a down day. The Dow Jones Industrial Average lost 25.03 points, or 0.17 percent, while the S&P 500 was down 0.16 percent and the Nasdaq declined 0.3 percent.