The rising inflation rates seem to hinder the American perception of a comfortable middle-class lifestyle despite a flourishing job economy and ascending income levels. The steadily increasing cost of living is diluting the clear narrative of what it means to be middle-class for many.
Take, for example, Vincent, a Medical Sales Rep that despite his substantial annual earnings of $130,000, struggles with saving money and planning for significant life events – such as homeownership and starting a family – due to the formidable cost of living in the city of Santa Barbara.
Like Vincent, many other middle-class individuals express their disbelief in reaching the previously attainable dreams of the middle-class, such as home or car ownership in the present economic environment.
This gloomy sentiment continues to permeate as monthly bills and long-term aspirations seem to fight a never-ending battle. As Vincent suggests, remedial actions such as revisiting the present economic strategies and tax reforms might serve as a lifeline for these financial discomforts.
The Pew Research Center defines a household earning between $48,500 and $145,500 as middle-class.
Inflation’s impact on middle-class perspectives
Despite falling within this range, many struggle to keep up with a consistent middle-class lifestyle due to growing financial instabilities and the unpredictability of future prospects.
Eoin Sheehan, a senior research analyst, suggests that the hike in living expenses is the main culprit reshaping the Americans’ understanding of the middle-class status, leading to a questioning of the actual strength of the economy, despite continuous growth, employment stability, and wages starting to supersede inflation.
The rapid upsurge of living essentials costs compared to income, causing shrinking savings and monetary insecurities, is a major cause of this shift in perception.
For future economic policies, this shift holds significant weight. Lawmakers should address these issues urgently to restore faith in the economic stability by perhaps implementing strategies that curtail the rising cost of living and promote a fairer wealth distribution.
If left unchecked, this trend might result in a public clamour for a complete revamp of the economic and socio-political structures. This means lawmakers and economic strategists might have to consider comprehensive reforms to stabilize the escalating costs and preserve the value and attainability of the middle-class status in the country.
However, wealth advisor Chris Collins argues that with careful financial planning, middle-class goals, like retirement and homeownership, are still possible regardless of the state of the economy.
