Land of opportunity loses hope: US economy strong yet middle class struggling

Washington: Almost two-thirds of Americans considered middle class say they are facing economic hardship and don’t anticipate a change for the rest of their lives, according to a poll commissioned by the National True Cost of Living Coalition.

By many traditional measures, the US economy is strong, with robust labour, housing and stock markets, as well as solid gross domestic product growth. But the data doesn’t capture the financial insecurity of millions of households who worry about their future and are unable to save, according to the group, which was created this year to come up with cost-of-living tools that help gauge economic wellbeing.

Biden has focused on rebuilding the middle class. But is anyone listening?Credit: Bloomberg

Despite a series of economic reforms by US President Joe Biden’s administration and Congress, Americans are experiencing the strain of inflation, stagnant wages, and higher interest rates. Middle-class economic discontent is seen as a lingering vulnerability for Biden’s re-election chances.

Biden, channelling populist outrage for inequality, has called for higher tax rates on businesses and rich Americans. Donald Trump, who claimed to represent forgotten Americans in the 2016 campaign, has pledged tax cuts for the middle class if he is elected in November.

In the large poll of 2500 adults, 65 per cent of people earning more than 200 per cent of the federal poverty level – at least $US60,000 ($90,000) for a family of four, often considered middle class – said they were struggling financially.

A sizeable share of higher-income Americans also feel financially insecure. The survey shows that a quarter of people making more than five times the federal poverty level – an annual income of more than $US150,000 for a family of four – worry about paying their bills.

Overall, regardless of the income level, almost six in 10 respondents feel that they are currently financially struggling.

“The economy is booming, and yet many Americans are still gasping for air financially,” said Jennifer Jones Austin, chief executive officer of the Federation of Protestant Welfare Agencies, an anti-poverty advocacy organisation that is part of the team that commissioned the poll, and co-chair of the National True Cost of Living Coalition. “They simply don’t have the breathing room to plan beyond their present needs.”

About 40 per cent of respondents were unable to plan beyond their next pay cheque, and 46 per cent didn’t have $US500 saved. The February poll found that more than half said it was at least somewhat difficult to manage current levels of debt.

The quick rise in interest rates, coupled with high levels of outstanding debt, helps explain the disconnect between economic indicators and how many Americans feel financially.

Pressure on parents is increasing as the cost of everyday goods and services rises.Credit: Bloomberg

The poll, conducted by Seven Letter Insight, also highlights the divide between debt-free households sheltered from the impact of rising rates and families who are overwhelmed with ballooning loan and credit card payments. One-third of the respondents said they have no debt at all.

The responses on savings also show wide disparities. About one in five respondents have at least $US10,000 saved, but 28 per cent have no savings at all. Overall, one in six said they regularly have to make tough decisions on which bill to pay first.

David Jones, co-chair of the National True Cost of Living Coalition, said the polling results crossed party lines.

“It was Republicans, Independents, Democrats expressing the same kinds of issues,” he said. “It’s not going away, no matter who becomes president.”

Former US president Donald Trump won much support from working-class Americans in 2016.Credit: Bloomberg

Some of the findings tracked with the Federal Reserve’s annual survey of household economics and decision-making, published last month. In that poll, close to half of respondents could cover a $US2000 expense, but 18 per cent of adults said the largest emergency cost they could handle right now using only savings was under $US100, and 14 per cent said they could afford an expense of $US100 to $US499.

Bloomberg, with Chris Zappone

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