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February 12, 2009

Half the World is Middle Class and 4 Billion Have Mobile Connections



Middle-class people do not live from hand to mouth, job to job, season to season, as the poor do. A local middle-class person in a developing country begins where people have a third of their income left for discretionary spending after providing for basic food and shelter. This allows them not just to buy things like fridges or cars but to improve their health care or plan for their children’s education. Half of the world's population is now middle class by local standards of having 1/3 of income available for something other than basic needs.

The world passed its four billionth mobile connection this week as well.

2001 one billion mobile connections
2005 two billion mobile connections
2007 three billion mobile connections
Q2 2008 50% of all human beings are carrying a mobile phone
There are 100 million mobile broadband connections in 2009

Usually, an income of that size requires regular, formal employment, with a salary and some benefits, that is, a steady job—another key middle-class characteristic. The income needed to have a third of it left over after meeting basic needs also varies from place to place. In China, for example, $3,000 a year may be enough in Chongqing or Chengdu, big cities in the west, but not in Beijing or Shanghai. So defining the middle class in absolute terms is hard.




China's local middleclasss boomed some time between 1990 and 2005, during which period the middle-class share of the population soared from 15% to 62%. It is just being reached in India now. In 2005, says the reputable National Council for Applied Economic Research, the middle-class share of the population was only about 5%. By 2015, it forecasts, it will have risen to 20%; by 2025, to over 40%.

Using a somewhat different definition—those earning $10-100 a day, including in rich countries—an Indian economist, Surjit Bhalla, also found that the middle class’s share of the whole world’s population rose from one-third to over half (57%) between 1990 and 2006. He argues that this is the third middle-class surge since 1800. The first occurred in the 19th century with the creation of the first mass middle class in western Europe. The second, mainly in Western countries, occurred during the baby boom (1950-1980). The current, third one is happening almost entirely in emerging countries. According to Mr Bhalla’s calculations, the number of middle-class people in Asia has overtaken the number in the West for the first time since 1700.


FURTHER READING
China had more car sales in January 2009 than the US did

China's overall vehicle sales, including trucks and buses, totaled 735,000 units in January, a 14.4% drop from a year ago and a more modest 0.8% slide from December. U.S. vehicle sales plunged by 37%, to 656,976 units, the lowest level in 26 years.

General Motors has forecast that China's vehicle sales may reach 10.7 million units in 2009, compared with 9.8 million vehicles in the United States
.

Before the credit crisis, the USA had been selling about 16 million cars and trucks


In 2007, sales were about 16 million cars and trucks in the USA.
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