But as the US teeters on the edge of recession, life is becoming harder for the average American. With the purchasing power of the US dollar in sharp decline – it takes $2.66 to buy the same amount of goods that $1 would have bought in 1980 – and household incomes dropping, Americans are being forced to cut back on some of the products that have made life good. In western Europe, consumers are in a similar quandary, with France last week becoming the first large economy to acknowledge it had fallen into a recession.
But in Asia, eastern Europe and South America, where many economies are still growing, life has been getting better for emerging middle-class consumers, as more people than ever can afford to buy basic consumer products such as toothpaste, televisions and shampoo.
“In developed markets [such as the US] consumers are still trying to preserve their buying power, which is all about trading down,” says Jeffrey Palma, an equity strategist at investment bank UBS. But in emerging markets the story is different,” he adds. “Incomes are rising . . . the phenomenon of trading up is still very much in place.”