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6 Sep, 2012

Shrinking U.S. Middle Class Threatens Economic Growth, Says Financial Newsletter

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New York, NY (PRWEB) September 04, 2012  – According to Michael Lombardi, lead contributor to Profit Confidential, the American middle-class segment is shrinking, as it currently makes up about 51% of the U.S population, compared to 61% in 1971.

As Lombardi notes, economic growth occurs when there is a rising demand for goods and services, and historically, this demand has largely come from the middle class. With a shrinking middle class, Lombardi sees weak economic growth and tough times ahead for the American economy.

“In the 70s, the middle class earned 62% of the nation’s income and the wealthier Americans received 29%,” reports Lombardi. “Compare that to now. In 2010, the middle class earned only 45% of the nation’s income.”

In the article “U.S. Middle Class on Verge of Collapse?,” Lombardi goes on to add that 85% of middle-class Americans say it is now more difficult to maintain their standard of living than it was just a decade ago.

“The recession not only stalled economic growth, but it also affected the net worth of middle class families,” argues Lombardi. “The U.S. middle class saw a decline of 28% in their net worth over the last decade—from $129,000 in 2001 to $93,000 in 2011.”

Lombardi says that the net worth of lower income families fell a steeper 45%. “There is no doubt the middle class was the reason for economic growth in the past. Unfortunately, they haven’t been able to take the blow or the recession,” claims Lombardi.

Lombardi thinks that the standard of living in America has gone down for the people living in a typical middle-class family since the recession.

Lombardi concludes, warning that “There is a clear indication of weaker demand and no economic growth. The declining middle class and a significant portion of the population falling into poverty are not good signs in any economy.”

Sources:

Associated Press, August 22, 2012.

Pew Research Center, http://pewresearch.org/.

To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.