To regular readers of TBP, this is very old news – but the significant play it has gotten recently is not.
We started discussing this in 2005 — see The Disconnect and Economic Classes. I called it The Middle Class Squeeze; Dan Gross termed it the Cramdown. See also Middle Class Squeeze Continues and The Bifurcated Economy
But the phenomena is very real, and it is likely to continue as a factor imapcting sentiment as well as retail sales.
Income Gap Is Widening, Data Shows
DAVID CAY JOHNSTON
NYTimes, March 29, 2007