By Michael Snyder – End Of The American Dream
Do you remember the days when it seemed like almost everyone in America was middle class? Unfortunately, those days are long gone and the grinding down of the middle class in the United States appears to be accelerating. According to a brand new study that was just released by Pew Charitable Trusts, household spending increased by 14 percent between 2004 and 2014, but median household income decreased by 13 percent during that same time period. Both of those figures were adjusted for inflation. What this means is that the cost of living has steadily gone up, but our incomes have gone down. In fact, as you will see below approximately one-third of all Americans don’t even make enough money to pay for the basic necessities at this point. The middle class is being squeezed like never before, and very few of our leaders seem to care.
It isn’t because we are buying a lot of luxuries that our expenses are going up. According to Pew, U.S. families are now spending a larger percentage of their budgets on the basics such as housing, food, health care and transportation than they were a decade ago. In fact, it has gotten to the point where approximately one-third of all Americans don’t bring home enough money to cover the core necessities. The following comes from Zero Hedge…
However, according to a striking new Pew study while household spending has returned to pre-recession levels (the average household spent $36,800 in 2014) incomes have not.
Specifically, while the median income had fallen by 13% from 2004 levels over the next decade, expenditures had increased by nearly 14%. But nobody was more impacted than the one-third of households which the study defines as “low-income.” Pew finds that while all households had less slack in their budgets in 2014 than in 2004, lower-income households went into the red by over $2,300.
In other words, approximately one third of American households were no longer able to cover the core necessities – food, housing and transportation – with average income.
A decade ago, U.S. households in the bottom third of the income scale still had an average of $1,500 left over each year after paying for the basic necessities of life.
But today, those same households are $2,300 in the red after paying for the basic necessities of life. Perhaps this is one reason why credit card debt in this country has hit a new all-time high.
Families in the middle third of the income scale are being squeezed as well. A decade ago those households had $17,000 left over each year after paying for the basic necessities, but now that number has fallen to just $6,000.
And of course most of that “discretionary income” is rapidly spent on other things such as entertainment. As a result, most American families find themselves living on the financial edge…
About the author:
Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.
Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream.
Read his new book Get Prepared Now!: Why A Great Crisis Is Coming.
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