End Of The Middle Class: Americans Are Suffering As Prices Rising On Thousands Of Different Products

While the price of everything aggressively rises all across the nation, incomes are stagnating, and America’s middle-class is steadily shrinking. Millions of middle-income earners are having to spend a larger share of their monthly budgets to afford soaring daily necessities.

As the gap between the rich and the rest of us gets wider, more and more people who used to have comfortable lives are now struggling to afford the bare minimum.  Over the past few years, accommodative monetary policies have helped to debase the value of our currency.

Adding that to the worst inflation in four decades, Americans’ purchasing power has never been lower. Economists say that a perfect storm of events is aggravating the situation. Supply chain disruptions are causing shortages of everyday staples and pushing prices to skyrocket. That’s affecting the food we put on our tables, the national housing supply, and the price of vehicles and electronics.

On top of that, a global energy crisis is sending oil prices through the roof, and resulting in a steep increase in the cost of gasoline, natural gas, and essentially all energy forms our society needs. The impact of the 7% increase in inflation is making the vast majority of our population experience some level of financial distress. Even those whose incomes surpass the national average are reporting difficulties to make ends meet and have been taking on more debt than ever before.

Households that typically had stable finances and lifestyles are currently having to make some painful choices: they’re substituting the products they used to consume with cheaper options, driving less to save on gas, curbing on spending, using more their credit cards, and moving to less expensive areas in a compromise to afford to live in a country where everything is getting significantly more expensive.

The stunning rise in the cost of living is a potentially disastrous problem for our economy, and it is affecting as many as 61% of Americans. While the difference between the rich and the rest of the population is abysmal, the gap between middle-income earners and low-income earners is actually dismal.  Those earning about $24,000 to $45,000 are defined as low-income workers, they spend roughly 110% of their income each year. Middle-income workers are represented by those earning about $45,000 to $76,000 and, on average, they spend 89% of what they earn in a year.

But recent numbers show that the share of middle-income workers spending more than they earn is rising at an alarming pace. That’s happening because they have been taking on more and more debt to pay their monthly expenses. Consumers are dealing with across-the-board price hikes. From groceries to gasoline, the persistent increases are making it impossible for household income to keep up with the pace of a higher overall cost of living.

Just over the past 12 months, food prices have spiked over 30 percent all across the globe, and several food manufacturers are announcing further price increases on top of the previous ones. According to the Consumer Price Index from the Bureau of Labor Statistics, food prices have faced the largest year-over-year growth since 1990.

A family that used to spend $500 per month on groceries in 2019, is now spending roughly $637 depending on the state. That’s a big difference for people with stretched budgets. Additionally, housing costs have exploded in the past two years, jumping nearly 20% nationally, and up to 37% in some states, which is undoubtedly making homebuying more and more unaffordable.

 Meanwhile, gasoline prices have soared by 50% nationally, and almost 70% in some states, including California.  In essence, all of this means that the American dream is becoming more elusive for the U.S. middle class. And some economists are warning that this group is getting smaller with each passing year.

The fact that about 7.4 million people have lost ground in the occupations that used to be ladders to middle-class lives for them and their families, means that more and more Americans are destined to a future of financial uncertainty. 

For those who have been living paycheck to paycheck, the rising prices of everything are making some prioritize paying rent or buying food, while others are living in their cars. The once great and strong America now seems far from the reach of everyday Americans.

Day by day, it gets harder to afford the soaring cost of living. And considering the chaotic outlook for 2022, we should start bracing for some awfully dark times. https://www.epiceconomist.com​

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