As inflation continues to devastate the finances of middle-class American families, the December report from Moody’s Analytics revealed that families spend an estimated $72 more per month on food than they did a year ago.
In its annual fourth-quarter study of 1,263 adults with salaries between $30,000 and $100,000, the financial services business Primerica found that an astounding 81% of households in the income group are preparing for a recession in the coming year.
Recession Affects Middle-Class American Families
More than six in ten (63%) say they are now preparing or intend to prepare for one. Many of these middle-class American families are already under financial strain.
Seventy-two percent say that their salary is not keeping up with the cost of living, according to a study by Primerica. And three-quarters of respondents believe they have been unable to save for the future, up from 66% a year ago.
The rising cost of living partially explains why the middle class has experienced a decline in their personal wealth growth. According to data produced by the University of California Berkeley and reported by Bloomberg, the wealth of middle-class households reached a record high of $393,300 in March of last year.
But when inflation surged and the government scaled back relief measures, the golden age of the middle class disappeared; from March to mid-October, the average wealth of the middle 40% decreased by 7%. This is the largest decline since the Great Recession.
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Massive Companies Layoffs
For middle-class workers, the workplace appears to be holding on by a thread, which is unfortunate. While salary increases for the upper class have kept pace with inflation, wage increases for the middle class have not always kept company.
And experts warn that many of the higher-paying management positions that helped pave the way for the middle-class American Dream could be the first to go into a recession, which generally affects blue-collar employees the hardest.
Look no further than the layoffs at Amazon, Salesforce, and major retailers like Walmart and Gap in the technology sector.
It’s not good news for the income category, which is already declining. In 1971, 61% of U.S. citizens were classified as middle class; by 2021, this percentage will shrink to 50%, according to Pew Research Center research.
According to Pew, the new middle-class income range is between $30,003 and $90,010 for a single-person home and $51,962 and $155,902 for a three-person household. No wonder fewer Americans view themselves as middle class than before the Great Recession.
Primerica reveals that middle-class households are so pessimistic about their circumstances that they do not expect their personal finances or the economy to improve by the end of the year. However, they are not going Charlie Brown is deeply existential and pessimistic.
In spite of a decline of 11 percentage points over the past year, the majority of respondents (53%) remain optimistic about their financial status.
The good news is that inflation is gradually moderating; it fell in December for the first time since 2020. Despite the fact that things may soon turn around, the middle class in 2022 is still weathering the economy and preparing for its next blow.
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