Unlike kids, America’s middle class is not doing well. It seems like every other day, economists are predicting a recession that varies in severity (from doomed to probably not), worrying middle-class families.
Financial services firm Primerica’s fourth-quarter annual survey of 1,263 adults with incomes between $30,000 and $100,000 found that a whopping 81 percent of households in that income bracket are preparing for this year’s recession. Prepare. More than half (63%) said they were already preparing for a recession or planning to.
Many middle-class families are already feeling the pinch. Primerica found that nearly three-quarters (72%) of people felt their income was not keeping pace with the rising cost of living. Seventy-five percent said they did not have the ability to save for the future, up from 66 percent a year ago.
“Inflation, especially in discretionary items such as food and gasoline, has been inevitable over the past year and has threatened to Financial security for the family.” About three-quarters of households said they had cut back on discretionary spending due to rising costs of living, and just over half had to tap into emergency funds to cover expenses.
The soaring cost of living partly explains the fall of the middle class from its wealth boom during the pandemic. Middle-class household wealth hit a record $393,300 in March 2022, according to data aggregated by the University of California, Berkeley and published by Bloomberg. But the golden age of the middle class is fading as inflation soars and government spending cuts in social assistance; the average wealth of the 40% of the middle class fell by 7% from March to mid-October. This is the largest drop since the Great Recession.
It doesn’t help that the jobs of middle-class workers also seem precarious. While wage growth for the upper class has been able to keep pace with rising inflation, wage growth for the middle class has often lagged behind. Experts predict that many of the jobs that paved the way for the middle-class American Dream — high-paying managerial jobs — may be the first to disappear in a recession that typically hits blue-collar workers the hardest. Look no further than the layoffs at companies ranging from tech companies like Amazon to Salesforce to retail companies like Walmart and Gap to get an idea of what’s going on.
This is not good news for classes whose incomes have already shrunk. According to an analysis by the Pew Research Center, 61% of U.S. adults were considered middle class in 1971, and by 2021 that number has dropped to 50%. According to the Pew Research Center, the measure of middle class has changed: single-person households earn between $30,003 and $90,010, and three-person households earn between $51,962 and $155,902 to be considered middle class . It should come as no surprise that fewer Americans consider themselves middle class today than before the Great Recession.
Primerica found that middle-class households are so disillusioned with where they are, they don’t expect their personal finances or economic situation to improve before the end of the year. But they will not turn into Charlie Brown (the protagonist in the comic “Peanuts” by the famous American cartoonist Charles Schultz. Although he often encounters one kind of misfortune, Charlie always fails and never gives up. .—Annotation) (Charlie has extreme existential and pessimistic tendencies). A majority of respondents (53%) said they were still optimistic about their financial situation, although this proportion fell by 11 percentage points in a year.
The good news for them is that inflation is slowly cooling: In December 2022, inflation fell for the first time since 2020. While things may turn around soon, the middle class is still weathering the economic test of 2022 and preparing for the next financial hit. (Fortune Chinese website)
Translator: Zhong Huiyan-Wang Fang
Unlike the kids, the middle class is not alright. It seems as if every other day economists are predicting varying shades of a recession (from doomed to not so doomed), and it’s worrying middle-class households.
A whopping 81% of households in the income bracket are bracing for a recession this year, finds financial services company Primerica in its annual fourth-quarter survey of 1,263 adults with incomes between $30,000 and $100,000. More than) half say (63% re already preparing or planning to prepare for one.
Many of these middle-class households are already feeling financially strapped by the economy. Nearly three-fourths (72%) believe that their income isn’t keeping up with the cost of living, Primerica finds. And three-quarters say they haven’ t been able to save for the future, up from 66% a year ago.
“Inflation over the past year, especially in non-discretionary items like food and gasoline, has hurt the financial security of families as it was impossible to avoid,” Amy Crews Cutts, an economic consultant to Primerica, says in a press release. Around Three-fourths of households reported curbing non-essential purchases due to the cost of living and just over half had to dip into their emergency funds to cover expenses.
The soaring cost of living partly explains why the middle class has fallen from their pandemic wealth boom. During March of last year, wealth for middle-class families reached a record high of $393,300, according to data produced by the University of California, Berkeley, and published by Bloomberg. But the golden age of the middle class faded as inflation skyrocketed and the government rolled back relief efforts; from March to mid-October, the average wealth of the middle 40% dropped by 7%. It’s the biggest drop since the Great Recession.
It doesn’t help that the workplace seems to be hanging on by a thread for middle-class workers. While wages have increased for upper-class individuals to match inflation, the same wage increases weren’t always found for the middle class. And experts predict that many of the jobs that helped pave the way to the middle-class American Dream—higher-salaried management roles—could be the first to go in the event of a recession, which typically hits blue-collar workers the hardest. no further than all the layoffs in tech, from Amazon to Salesforce, and corporate retail, such as Walmart and Gap.
It’s not great news for the already shrinking income bracket. Sixty-one percent of US adults were considered middle class in 1971, dropping to just 50% in 2021, according to an analysis from Pew Research Center. It’s shifted the metric for what’s considered the middle class: between $30,003 and $90,010 for a single-person household and $51,962 to $155,902 for a three-person household, per Pew. No wonder fewer Americans consider themselves to be middle class than they did before the Great Recession.
Middle-class households are so dismal about their situation that they don’t expect their personal finances or the economy to improve by the end of the year, Primerica finds. But they’re not going full Charlie Brown (deeply existential and pessimistic). Most respondents (53%) said they still feel positive about their financial situation, although that’s dropped by 11 percentage points over the year.
The good news for them is that inflation is slowly cooling off: It decreased in December for the first time since 2020. But while things might be turning a corner soon, the middle-class is still weathering 2022’s economy and readying themselves for its next blow .
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