How the Economic Lives of the Middle Class Have Changed by the Numbers Since 2016
The United States (USA) economy is the strongest it has been in ages. Growth has been robust, and the unemployment rate is at generational lows, as new data Friday affirmed. Yet the Republican Party, which controls the White House and Congress, trails Democrats substantially in polling on which party is preferred.
It helps to look beyond the overall economic data to understand this disconnect. After all, you can’t eat G.D.P., and good jobs numbers aren’t the same as a place to live. If you look instead at the actual financial lives of average middle-income families from 2016, their incomes, spending, assets and debt, and how shifts since Election Day in 2016 would have been likely to affect them, you get a more mixed picture.
Wages haven’t risen much. Inflation has been low, helping keep the price of most staple goods down, though with gasoline prices a costly exception. The tax cut has left more money in most middle-class families’ pockets, but only a bit.
In terms of assets, the typical middle-income family has either zero or minimal holdings in the stock market, meaning the surge since November 2016 hasn’t paid direct benefits. But a majority of households in this income bracket do carry some credit card debt, which has become more expensive amid rising interest rates.
And in terms of housing costs, rents haven’t risen much — but a sharp rise in mortgage rates has made homes less affordable for anyone looking to buy. Add it all up, and while the benefits of a surging economy, tax cuts and the rising stock market are real, they net out to a less favorable economic reality for a family in the middle of the income scale than the economic headlines might imply.
This math is oversimplified, it doesn’t reflect how families may have changed their spending and saving patterns in the last two years, and conflates different definitions of middle income. But the back-of-the-envelope results are revealing: If you take the benefits of higher wages and the lower taxes, subtracting higher costs for consumer goods and higher interest rates on credit card debt, it works out to a gain of $122 a month.