During the last several years, subscribers to my investment newsletter, PowerTrend Profits, and before that the mutual funds and hedge funds that I worked with, each made big money by investing in my Rise and Fall of the Middle Class PowerTrend. For those of you who are not familiar with this particular PowerTrend, it identifies those companies that are poised to benefit from pressured, if not falling, disposable income in the developed markets, such as the United States and Western Europe, as well as those geographies with rising disposable incomes. The latter category includes Latin America, Asia and China in particular.
The rapid development in those regions is reflected in faster economic growth rates as those countries build out their infrastructure, attract industries, create jobs and benefit from an expanding middle class. That sounds pretty much like the United States several decades ago. Today, we hear more and more about the shrinking middle class here in the United States, while the middle class in these developing economies is exploding. It is estimated that gross domestic product (GDP) growth in 80% of the developing world is expanding at twice the rate of the developed world. That growth means rising wealth in these population hubs is creating armies of new consumers by the day.
China — the obvious one to watch. Back in 2000, only 4% of urban households in China were middle class. By 2012, that percentage soared to more than two-thirds, and it‚??s expected by 2022 to number more than 630 million, or 45%, of the entire population in China. For some perspective, the entire U.S. population currently sits near 317 million in total. By 2022, China‚??s middle class is expected to be consuming goods and services valued at $3.4 trillion — 24% of GDP.
Finish reading China and Africa: Emerging Markets to Watch.