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The middle class in the U.S. has been steadily shrinking for decades, but in recent years our leaders have greatly accelerated that process. In 2020, 2021 and 2022 they absolutely flooded the system with new money, and almost all of that new money went into the pockets of the wealthy. The gap between the wealthy and the rest of us is now larger than ever, and that isn’t a good thing for our society.
Even if you are still making as much money as you did a few years ago, you have lost a lot of ground financially, because the cost of living has been rapidly eating away at our standard of living. As I covered the other day, household income in the United States has declined by 9.1 percent since April 2020 after adjusting for inflation and taxes. In other words, the middle class is a whole lot smaller than it was in April 2020, and it continues to get smaller with each passing day.
According to Moody’s chief economist Mark Zandi, on average Americans are now spending “$709 more per month on everyday goods and services than they did two years ago”…
Americans are spending $709 more per month on everyday goods and services than they did two years ago, according to Moody’s Analytics.
Moody’s chief economist Mark Zandi made the statement Friday on X, formerly known as Twitter, as part of his analysis of July’s consumer price index report.
Is the rising cost of living causing financial stress for you?
If it is, you are definitely not alone.
The wealthy are doing just fine for the moment, but inflation has caused a lot of pain for the vast majority of the rest of us.
Just paying for a place to live has become incredibly oppressive. Personally, I was astounded to learn that the average rent in Manhattan has now reached $5,588 per month…
New Yorkers are feeling the squeeze as rents hit a new high.
Rent in Manhattan soared to a record-high average of $5,588 in July, up 9% from 2022.
It’s hurting tenants struggling to find apartments they can afford. One apartment hunter said she can’t find a studio to suit her work-from-home needs for less than $5,000.
Who can afford that?
Only the wealthy.
Of course the truth is that rents have been soaring all over the country.
It is being reported that the nationwide average rent-to-income ratio has exceeded 30 percent for the past two years. This is the very first time in the entire history of our country that this has ever happened.
With rents being so high, a lot of Americans are being forced out into the streets. According to the Wall Street Journal, the United States “has seen a record increase in homeless people this year”.
Please let that statement sink in for a moment. So far in 2023, the number of homeless people in the U.S. is up 11 percent from last year.
That is the biggest jump that the government has ever recorded. Not even during the recession of 2008 and 2009 did we see anything like this. Unfortunately, the outlook for the months ahead is not promising, because it looks like the cost of living is going to continue to rise at a brisk pace.
According to CNN, the average price of a gallon of gasoline has nearly reached 4 dollars a gallon…
Pump prices are creeping towards $4 a gallon nationally.
The national average for regular gasoline hit $3.85 a gallon on Monday, according to AAA. That’s the highest level since October 19 and comes just weeks ahead of Labor Day weekend when millions of Americans will hit the roads.
I remember the days when I could fill up my vehicle for less than 20 dollars. But the other day I spent 70 dollars at the gas station and that didn’t even fill the tank.
And we are being warned that U.S. consumers are going to have a lot less discretionary income in the months ahead as tens of millions are forced to start making payments on student loans again…
For more than three years, federal student loan borrowers have not had to make monthly payments. But that pandemic-era pause is coming to an end this fall, setting up a financial shock for millions of Americans and the big-name stores, such as Target, Nike, Under Armour and Gap, where they shop.
About 44 million borrowers in the U.S. were affected by the payment pause, which initially began in March 2020 at the onset of the COVID-19 pandemic. The Biden administration extended the pause for the eighth time in November but will not do so again as part of the bipartisan debt ceiling deal approved by Congress.
More than 60 percent of all Americans are already living paycheck to paycheck, and many are increasingly turning to debt in order to make ends meet.
In fact, total credit card debt now exceeds the one trillion dollar mark for the first time ever, and that is not a good sign at all.
Also, an increasing number of Americans are now dipping into their 401(K) plans…
When father-of-two Ivan Marusic lost his job overnight in 2020, he was left panicking about how he would cover his mortgage.
It prompted the 35-year-old, from Texas, to do something he never thought he would: withdraw $20,000 from his 401(K). It is a decision he is still paying for now.
‘I was really hesitant to do it because I knew it would set me back financially in the long run. But I didn’t have any other options. I had already maxed out my credit card and I was running out of money,’ Marusic, a tech worker who has since founded the website Game Taco, told Dailymail.com
We really are witnessing a middle class meltdown.
I have been warning about this trend in my books for years, and now the evisceration of the middle class has greatly accelerated.
I wish that I could tell you that there is economic hope on the horizon. But I can’t do that, because our leaders continue to make incredibly self-destructive decisions which are going to cause immense economic pain for the entire country.
Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
Article cross-posted from The Economic Collapse Blog.
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