Smart Economy

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

Why will this recession / depression be longer and deeper then most of the downturns in the last 100 years?

In each of the post war downturns, it was the consumer, namely the middle class that spent its way out of a recession, using either savings or bank credit.

Today the  consumer is maxed out and the middle class in the US is shrinking, turning into an underclass-- bad news for any business who relies on this cohort of consumers for increasing business sales.

Elizabeth Warren a Harvard  Law professor, and author of the Two Income Trap, has been studying the middle class  over an entire generation. She’s been comparing spending patterns of a typical family with two kids today (data from 2005-2006) and a generation ago ie in the 1970’s. and is warning of the coming collapse of the Middle Class. Her presentation at UC in 2007  summarizes her research that shows that over a  generation, a typical family is

• A) more in debt  ie. 1.47% revolving  credit and 14% savings in 1970 vs over 15% of income in revolving credit and negative savings of 0.8% in 2005-2006) and
• B) now spending less of their family income on clothing (down 32%), food (down 18%), per car ownership costs (down 24%) and appliances (down 52%), but is spending far more on Child Care (up 100%), Mortgage Payments (up 76%), Health Insurance (up 74%) ,the second or third car (up 52%) and all sorts of taxes (up 25%)

She makes the insightful point that all of the expenses in the first category that dropped over a generation are all flexible. You have the choice not to buy fashionable clothes or eat at restaurants but shop at discount malls or eat more at home.

All the expenses in the second category are fixed, so that the loss of one or two income earners due to layoffs can quickly drive a family into bankruptcy and foreclosure.

 

So a family with  a single income earner in 1970 averaging $32K, who  spent half of their income on fixed expenses had more money left over then a two income family earning on average $72 K in 2003 with 3/4 of their income going to fixed expenses.

 

THE BOTTOM LINE: Families are now far less resilient to financial shocks, despite having two income earners then they were in previous recessions with only one income earner.

 

See video from March 8, 2007 lecture  of Coming Collapse of the Middle Class Increased Risks, Lower Rewards and Shrinking Safety Net

 

Related Posts

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

82 Signposts to the current Recession Depression Summary from 2008

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

IBM endorses smart technology and a smarter planet

A while back when I was at the Idea Lab at the Design Exchange, I remember sitting over a coffee and exploring a thought exercise with some clients.

The question under debate was: What are  the generic elements or activities that would accelerate any new technology platform, (such as smart technologies) and overcome the initial market interia. Simply put, Is there a generic technology evolution matrix?

We came up with over 25 items. (see related Post-Do you know how to spot opportunities?)

One was having cartoonists make fun of your technology ( No, smart technologies aren't on Dilbert's radar screen yet, but any day now I hope)  Another key event would be to have some influential CEO highlight the benefits of your technology in a milestone keynote speech (act as a complimentor-in business strategy terms. )

Well for smart technologies, that breakthrough event may have happened this month on November 6^th, when IBM’s CEO, Sam Palmisano, outlined a new agenda for building a smarter planet - during a speech at the Council on Foreign Relation. (hat tip to Adam Christensen at IBM HQ)

 

 

From IBM's blog:

"In the speech, he outlines a number of the challenges faced today by people, governments, businesses and organizations. A lack of clean water for a fifth of the world’s population. Energy systems that waste more energy than they produce. Traffic in our cities that clogs roads and chokes economic growth. 

Clearly there are no simple solutions for these problems.

Technology can play a big role in helping find answers to these problems. While the Internet currently connects more than a billion people, in just a few years, it will connect more than a trillion objects. Everything from cell phones, cars, roads, buildings, and even objects in nature itself, will have embedded technology and be connected to one another, enabling tremendous advances in how we understand how the world works and make smarter decisions to make it work better. 

But technology is just part of the solution. Without the people, policies and culture to inspire and execute the change, nothing ultimately gets done."

From Sam’s speech:

[...]   These collective realizations have reminded us that we are all now connected—economically, technically and socially. But we're also learning that being connected is not sufficient. Yes, the world continues to get "flatter." And yes, it continues to get smaller and more interconnected. But something is happening that holds even greater potential. In a word, our planet is becoming smarter.

This isn't just a metaphor.I mean infusing intelligence into the way the world literally works—the systems and processes that enable physical goods to be developed, manufactured, bought and sold… services to be delivered… everything from people and money to oil, water and electrons to move… and billions of people to work and live.

 What's making this possible?

• First, our world is becoming instrumented: The transistor, invented 60 years ago, is the basic building block of the digital age. Now, consider a world in which there are a billion transistors per human, each one costing one ten-millionth of a cent. We'll have that by 2010. There will likely be 4 billion mobile phone subscribers by the end of this year… and 30 billion Radio Frequency Identification tags produced globally within two years. Sensors are being embedded across entire ecosystems—supply-chains, healthcare networks, cities… even natural systems like rivers.
• Second, our world is becoming interconnected: Very soon there will be 2 billion people on the Internet. But in an instrumented world, systems and objects can now "speak" to one another, too. Think about the prospect of a trillion connected and intelligent things—cars, appliances, cameras, roadways, pipelines… even pharmaceuticals and livestock. The amount of information produced by the interaction of all those things will be unprecedented.
• Third, all things are becoming intelligent: New computing models can handle the proliferation of end-user devices, sensors and actuators and connect them with back-end systems. Combined with advanced analytics, those supercomputers can turn mountains of data into intelligence that can be translated into action, making our systems, processes and infrastructures more efficient, more productive and responsive—in a word, smarter.

What this means is that the digital and physical infrastructures of the world are converging. Computational power is being put into things we wouldn't recognize as computers. Indeed, almost anything—any person, any object, any process or any service, for any organization, large or small—can become digitally aware and networked.

With so much technology and networking abundantly available at such low cost, what wouldn't you enhance? What service wouldn't you provide a customer, citizen, student or patient? What wouldn't you connect? What information wouldn't you mine for insight?

The answer is, you or your competitor—another company, or another city or nation—will do all of that. You will do it because you can—the technology is available and affordable.

But there is another reason we will make our companies, institutions and industries smarter. Because we must. Not just at moments of widespread shock, but integrated into our day-to-day operations. These mundane processes of business, government and life—which are ultimately the source of those "surprising" crises—are not smart enough to be sustainable.

[...]

Leaders will need to hone their collaboration skills, because we will need leadership that pulls across systems. We will need to bring together stakeholders and experts from across business, government and academia, and all of them will need to move outside their traditional comfort zones.

I’m struck by the questions this raises. What investments need to be made by both public and private institutions? What policy issues need to be debated and resolved? What role can individual citizens and employees play in helping bring about meaningful change?

I’m also struck by the potential opportunities inherent in finding solutions to these problems. 

see full text of Sam Palmisano's speech

Walter Derzko

 

From IBM's blog:

"In the speech, he outlines a number of the challenges faced today by people, governments, businesses and organizations. A lack of clean water for a fifth of the world’s population. Energy systems that waste more energy than they produce. Traffic in our cities that clogs roads and chokes economic growth. 

Clearly there are no simple solutions for these problems.

Technology can play a big role in helping find answers to these problems. While the Internet currently connects more than a billion people, in just a few years, it will connect more than a trillion objects. Everything from cell phones, cars, roads, buildings, and even objects in nature itself, will have embedded technology and be connected to one another, enabling tremendous advances in how we understand how the world works and make smarter decisions to make it work better. 

But technology is just part of the solution. Without the people, policies and culture to inspire and execute the change, nothing ultimately gets done."

From Sam’s speech:

[...]   These collective realizations have reminded us that we are all now connected—economically, technically and socially. But we're also learning that being connected is not sufficient. Yes, the world continues to get "flatter." And yes, it continues to get smaller and more interconnected. But something is happening that holds even greater potential. In a word, our planet is becoming smarter.

This isn't just a metaphor.I mean infusing intelligence into the way the world literally works—the systems and processes that enable physical goods to be developed, manufactured, bought and sold… services to be delivered… everything from people and money to oil, water and electrons to move… and billions of people to work and live.

 What's making this possible?

• First, our world is becoming instrumented: The transistor, invented 60 years ago, is the basic building block of the digital age. Now, consider a world in which there are a billion transistors per human, each one costing one ten-millionth of a cent. We'll have that by 2010. There will likely be 4 billion mobile phone subscribers by the end of this year… and 30 billion Radio Frequency Identification tags produced globally within two years. Sensors are being embedded across entire ecosystems—supply-chains, healthcare networks, cities… even natural systems like rivers.
• Second, our world is becoming interconnected: Very soon there will be 2 billion people on the Internet. But in an instrumented world, systems and objects can now "speak" to one another, too. Think about the prospect of a trillion connected and intelligent things—cars, appliances, cameras, roadways, pipelines… even pharmaceuticals and livestock. The amount of information produced by the interaction of all those things will be unprecedented.
• Third, all things are becoming intelligent: New computing models can handle the proliferation of end-user devices, sensors and actuators and connect them with back-end systems. Combined with advanced analytics, those supercomputers can turn mountains of data into intelligence that can be translated into action, making our systems, processes and infrastructures more efficient, more productive and responsive—in a word, smarter.

What this means is that the digital and physical infrastructures of the world are converging. Computational power is being put into things we wouldn't recognize as computers. Indeed, almost anything—any person, any object, any process or any service, for any organization, large or small—can become digitally aware and networked.

With so much technology and networking abundantly available at such low cost, what wouldn't you enhance? What service wouldn't you provide a customer, citizen, student or patient? What wouldn't you connect? What information wouldn't you mine for insight?

The answer is, you or your competitor—another company, or another city or nation—will do all of that. You will do it because you can—the technology is available and affordable.

But there is another reason we will make our companies, institutions and industries smarter. Because we must. Not just at moments of widespread shock, but integrated into our day-to-day operations. These mundane processes of business, government and life—which are ultimately the source of those "surprising" crises—are not smart enough to be sustainable.

[...]

Leaders will need to hone their collaboration skills, because we will need leadership that pulls across systems. We will need to bring together stakeholders and experts from across business, government and academia, and all of them will need to move outside their traditional comfort zones.

I’m struck by the questions this raises. What investments need to be made by both public and private institutions? What policy issues need to be debated and resolved? What role can individual citizens and employees play in helping bring about meaningful change?

I’m also struck by the potential opportunities inherent in finding solutions to these problems. 

see full text of Sam Palmisano's speech

Walter Derzko

Smart Virtual Mirror lets you try on different clothes without dressing room

Wouldn't it be nice if we could shop for clothes without constantly having to try them on in the fitting room?  The vision could soon become a reality thanks to the "virtual mirror" presented by Fraunhofer researchers at the IFA consumer electronics show in Berlin from August 29 to September 3 (in the Science and Technology Forum TWF, Hall 5.3). This mirror-like display enables shoppers to see themselves wearing different items of clothing without having to undo a single button.

"There is more than a grain of truth in the old cliché that men hate shopping for clothes.  They find fitting rooms a nuisance and prefer to go on wearing the same things that they have always worn.  Scientists at the Fraunhofer Institute for Telecommunications, Heinrich-Hertz-Institut HHI have developed a magic mirror that takes the stress out of trying on new clothes.  You simply have to choose one T-shirt or shirt, and the virtual mirror will show you wearing a range of different designs, without having to take off one to try on another."

“The principle is similar to the virtual shoe-fitting mirror that we developed last year for the Adidas flagship store in Paris,” says Anna Hilsmann of the HHI.  “But it is somewhat more difficult to create a realistic impression of T-shirts, shirts or sweaters in a virtual mirror.  These items of clothing develop folds that partially distort the image depending how the wearer moves about."

Trying on clothes in a magic mirror

Smart Displays and Shop Windows use gazing tracking

Eye tracking hardware and software have become a mature technology that works effectively in many contolled lab and experimental settings but real world applications "out on the street" have been few and far between.  Philips, the European consumer electronics company hopes to apply gaze tracking to displays in shop windows or museums.

According to New Scientist:

"The company's idea is to track the gaze of window shoppers to determine which items in the window they are staring at, then to display enlarged pictures, a slide show or other information about those items on nearby computer screens.

Philips says that the system could also be used in museums and art galleries to provide visitors with extra information as they need it"

see full story from Justin Mullins, New Scientist

Smart Sustainability Showcase for Toronto and Canada

From: Walter Derzko

Sent: Friday, July 11, 2008 12:19 AM

To: undisclosed list

Subject: re Smart Sustainability ShowCase for Toronto and Canada.

Importance: High

Dear Colleagues

I’d like to plant an idea with you – after speaking with a number of designers and vendors, I’m exploring the idea for a sustainability showcase that would feature theme based exhibits with smart technologies from Canadian and international sources-the best from Ontario, nationally and from around the world.

The launch would be 2010, The timing for this seems right.  The target audience would be Canadian business, consumers and school children

I’m writing a book on smart technologies and this would be a logical extension of the concept.

Two years ago I talked to Samantha Sannella and Poala Polletto at the Design Exchange (DX) in Toronto and with several people at the Ont Science Center.  Both groups expressed interest but said that we would need to find sponsors for the project

My business model for this would be three pronged -vendor based revenue, corporate based sponsor revenue and municipality based sponsorship ie city of Toronto or Mississauga and possibly the province of Ontario who may wish to promote sustainable manufacturing.

This concept would be a Canadian, in fact a North American first.

I have a list of 150 potential vendors, and designers from around the world who are working on smart technologies that we can start to approach.

The exhibits would be theme based, --the sustainable kitchen, the sustainable office, the sustainable retail shelf, the sustainable workspace, the sustainable community, the sustainable city etc and would be updated with new technologies every 3-5 years and have a 1-5 year forward focus. (what's commercially available now or in the very near future.

For other exhibits, there can be a regional or national focus ie smart sustainable technology from the UK, Finland, Germany (Fraunhofer Inst), China, Ukraine, Russia, or Singapore, Hong Kong etc

Corporate sponsors might include: Walmart, Rona, Home Deport, Canadian Tire, Loblaws, Sears, Imperial Oil, the banks (RBC, TD, RBC BMO) etc.

The Sustainability Showcase could be housed in a physical location, or it could tour from location to location around the city or province or be mobile ( on a bus the way the Japanese and Korean do- a display bus turned into a demo center that tours from school to school or to fairs and exhibitions.

OCAD students and staff and Beal senior fellows could play a hand in designing exhibit spaces and sourcing new vendors and sustainable technologies.

Several other revenue opportunities could spin off from this as well

Here’s just a few examples of what can be showcased

1) Environmentally sensible packaging such as Mercury-Absorbant NanoSponge packaging for broken compact fluorescent lamps (CFL's) http://smarteconomy.typepad.com/smart_economy/2008/06/mercury-absorba.html

2) Concrete Wood (from the example I mentioned June 2 at OCAD, when Bob Logan was bemoaning the lack of durability of pressboard shelving from Ikea.  See Concrete Wood from lodgepole pine trees destroyed by pine beetles (kills two birds with one stone) http://smarteconomy.typepad.com/smart_economy/2007/11/concrete-wood.html

3) End of Traditional Heating and Air conditioning Thin-film version of Active Building Envelope (ABE) systems could make conventional air conditioning and heating equipment obsolete http://smarteconomy.typepad.com/smart_economy/2006/07/thinfilm_versio.html

4) OLEDs New High efficiency flat light source OLEDs > Almost any surface in a home, whether flat or curved, could become a light source: walls, curtains, ceilings, cabinets, shelves or tables.  Http://smarteconomy.typepad.com/smart_economy/2006/04/new_high_effici.html

Lots more like these

For anyone who is interested in exploring the idea of a Smart Sustainability Showcase for Toronto, we are having a meeting on Tuesday July 22 at 11 am at the Ontario College of Art & Design (OCAD), Beal Institute for Strategic Creativity, room 600, 6th floor , 100 McCaul St, Toronto just south of the Ont Art Gallery.

Please RSVP, so we know how many people are coming

I have had some positive feedback from several organizations, & I’d like to push the concept forward

I'm sending this nationally and internationally in  case you are aware of any designers, vendors, manufacturers or research centers who have interesting cutting edge smart sustainable technology to showcase.

Contact me by email

----Walter  Derzko; Senior Fellow Beal Institute for Strategic Creativity, OCAD 

© 2005-2008 Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant, Keynote Speaker and Lecturer on Emerging Smart Technologies, Innovation, Entrepreneurship, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

Smart Inventory or Assest Tracking 08-017

Problem:

Inventory control and theft are a big problem in the retail sector especially with high ticket items such as computers or high end running shoes.

Smart Solution:

RFID technology is starting to take hold in more and more sectors.

Shoe manufacturer New Balance has deployed an item-level solution that tracks individual pairs of shoes from the distribution center to the factory store.  The company is realizing 99.5 percent accuracy.  Expected benefits include "reductions in receiving and replenishment labor costs, reductions in inventory levels and reduced stockroom retrievals," commented president and COO Jim Tompkins in the announcement.  The system uses the TrueVUE Platform software from Vue Technology, RFID tags from Avery Dennison Retail Information Services, and fixed and handheld readers from Motorola.

Source: RFID Update, Issue 760

The next level of intelligence integrates RFID with video surveillance and asset tracking

From one vendor's web site

..[this] system is a long-range RFID (Radio Frequency Identification) surveillance system with integrated video.  Using RFID, our system acquires targets and tracks their movement.  Integrated video allows the collection of evidence needed for convictions.  Our systen tracks people and assets over any range and notifies you when critical targets start moving.  It also sends video of the event and alerts to your cell, blackberry, email or pager, so you can make a decision on the required response."