As we know, rising inequality, especially the hollowing-out of the middle, has undermined the financial viability of retailers and other merchants of consumption that, during the postwar period, catered to the middle-class—and boosted the prospects of particular lines and whole businesses that target those at the tiny top and growing bottom of the distribution of income. As the New York Times reported in February,
In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models. . .
Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even…
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