The middle class has fallen to less than 50% of the population, according to a new report published by the Pew Research Center. Gasp. The middle class used to account for 61% of the population and it’s a fact that has got everyone from economists to politicians in a tizzy, as each and everyone of them tries to dissect exactly what that means and how it will help or hinder their agendas. The upper class rose 47%, growing from 20 million people to 50 million people with their share of the national income pie up 49% from 28%. In case you were wondering, 190 million of us are not upper-class. Got three people in your household? Well, if your household income is $41,869, then call yourself middle-class. But, the good news is that the median income for the middle class has risen 34%…since the 1970’s. Then there’s lowest – and fastest growing – bracket: 70 million among us make just 9% of the national income. Apparently, 99% of gains are going to just the top 10% of the population and a family income of less than $50,486 after taxes has a nasty way of causing that particular family to go even deeper into debt. Some argue that this income disparity explains why economic recovery is taking so much longer than it should. Others, however, argue that it’s all matter of how you look at the information and that the picture really isn’t all that grim. Hmmm.
How do you like your stake?
Guess what happens when Warren Buffett tells the world he owns shares of a company? If you guessed that shares go up then you’d be correct. For instance, today the Oracle of Omaha disclosed in a regulatory filing that his company, Berkshire Hathaway, owns a passive 8% stake in Seritage Growth Properties. So what makes for a “passive” stake? Basically, Warren Buffet buys a huge chunk, in this case about 2 million shares worth an estimated $70 million – $100 million and he, well Berkshire Hathaway anyway, sits on it for the long term. With Warren Buffett’s recent disclosure about his stake, the stock went up today as much as 17% at one point, hitting $41.18, all because of the exciting news. Seritage, by the way, is the spawn of a Real Estate Investment Trust (REIT) that was spun-off from Sears Holding Group as a way to help the embattled retailer capitalize on its approximately 235 real estate holdings. And Sears did just that when it managed to raise $2.7 billion from the REIT. Incidentally, while activist investors tend to love REITs, Washington DC is not fan of the practice and is doing its very best from letting spun-off companies turn into REITs. REITs don’t pay as much to Uncle Sam in corporate income tax like other companies do and its profits go almost entirely to shareholders. Then shareholders pay the taxes on those dividends at the same tax rates as their ordinary income. Preventing companies from exercising this little practice would raise about $4.3 billion for the government. But for now, Warren Buffett can just sit pretty sit on his big/little stake while Washington dukes out the issue in Congress.
Look out Apple Pay, Samsung Pay, Android Pay…Walmart has entered into the almost crowded mobile payment arena by launching, you guessed it – Walmart Pay. Through its own smartphone app, you simply use a credit, debit or even a gift card and voila! That purchase is yours in just a couple of swipes. Testing has already begun at Walmart’s home base in Arkansas and will likely launch in all 4,500 plus stores by next year. Walmart has been on the prowl to find ways to make for an easier shopping experience…at Walmart. It’s estimated that 22 million people use the current Walmart app every single month and that more than 50% of those online transactions take place on mobile devices. Walmart’s system, by the way, is cleverly designed to integrate nicely with other payment applications, including all the ones mentioned in the first sentence. If you need any more of a reason to use Walmart Pay, then consider that it’s actually a more hack-proof alternative – the app stores your card but transmits an alternate card number that is generated by the card issuer. The merchant never gets the real number which leaves hackers with nothing to hack from the merchant. By the way, Walmart doesn’t accept ApplePay. How very convenient.