We Are Optimizing Our Economy for the Upper Class (Until We Don’t)
The middle class is collapsing. Brands are rushing to the top or the bottom. The "Hourglass Economy" is profitable, but it’s a ticking time bomb.
Why your coffee costs $7 and why every airline is removing economy seats. The middle is a kill zone, and brands are fleeing to the safety of the rich.
Inspiration: Realizing that I can’t find a "normal" hotel anymore. It’s either a $500/night boutique experience or a $50 motel. The middle ground has vanished.
Picture an hourglass. Bulging at the top (Rich), bulging at the bottom (Budget), and thin in the middle.
That is our economy.
High-income earners (top 20%) are driving almost all consumption growth. They are inflation-resistant. Low-income consumers are trading down to private labels (Walmart/Temu).
The result? The "Middle Market" (Gap, Macy's, Red Lobster) is a kill zone.
The Corporate Pivot (Chasing the Whale)
Companies aren't stupid. They follow the margin.
Delta Airlines explicitly stated their strategy is "Premium." They are removing economy seats to add "Delta One" and "Premium Select." One business class passenger is worth 5 economy passengers, and they take up less space than 5 people.
Starbucks isn't about coffee anymore. It’s about the $9 custom cold brew with foam. They are pivoting from "Third Place for Everyone" to "Affordable Luxury for the Affluent."
Hotels like Hilton and Marriott are launching endless "Lifestyle Brands" (luxury) while budget options stagnate.
The Upside: The "Margin" Safety
Selling to the rich is safer. They don't stop spending when interest rates rise. They value time over price. This creates "Recession-Proof" revenue streams for companies (or so they think).
The Risk: The TAM Collapse
The top 10% is a great market, but it’s a small market.
If every brand pivots to luxury, the competition for those few wallets becomes a bloodbath.
This is the "Henry Ford" Problem. Ford famously paid his workers enough to buy the cars they built. If we optimize the economy only for the upper class, who buys the products? You can't run a GDP on Hermes bags alone.
Historical Parallels: The Roaring 20s
We have seen this before.
1920s: Massive wealth concentration. Boom in luxury goods (radios, cars) for the rich. Stagnant wages for the rest.
The result? The Great Depression. When the consumer base is too narrow, a small shock collapses the whole tower. An economy built on the spending of the few is structurally fragile.
Conclusion: The Pendulum
We are currently in the "Optimization" phase. We are extracting maximum value from those who have it.
My Prediction: The pendulum will swing back. The next massive unicorn won't be another luxury brand; it will be the company that figures out how to serve the forgotten middle class profitably.
