PEW released a study looking at the changes in income and wealth of the middle class, along with their assessment of who is to blame.

The report states:

“Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some—but by no means all—of its characteristic faith in the future.

These stark assessments are based on findings from a new nationally representative Pew Research Center survey that includes 1,287 adults who describe themselves as middle class, supplemented by the Center’s analysis of data from the U.S. Census Bureau and Federal Reserve Board of Governors.

Fully 85% of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living. Of those who feel this way, 62% say “a lot” of the blame lies with Congress, while 54% say the same about banks and financial institutions, 47% about large corporations, 44% about the Bush administration, 39% about foreign competition and 34% about the Obama administration. Just 8% blame the middle class itself a lot.”

Find the report here

A few years ago, I found data that showed the extent to which our economy is based on debt. Not just the federal debt, but the debt accumulated by consumers, banks, and financial institutions. At the time, the federal debt (both public and private debt) was $10 trillion. Consumers had a total of $11 trillion, banks were at $13 trillion and financial institutions were at $17 trillion. Clearly, this was before the economic collapse. I was searching for more current info and came across this site: Grandfather Economic blog by Michael Hodges.
Here is post from 2011–find at: Debt Report

“BIG PICTURE – $57 TRILLION of DEBT in America, and rising rapidly.
Here’s one graphic of many shown in the main Total Debt Report

This is A SCARY CHART – showing trends of total debt in America (the red line) reaching $57 trillion in 2010 vs. growth of the economy as measured by national income (blue line). (adjusted for inflation).

Which line goes up faster, the red debt line or the blue net national income line? Answer: the debt line.

And, that debt line has exploded up faster and faster than national income! Right? (maybe, like this chart, your own personal or business debt is also going up faster than your own income – – possible?)

As mentioned, debt is here defined as all U.S. debt (sum debt of federal and state & local governments, international, and private debt, incl. households, business and financial sector debts, and federal debt to trust funds).

This chart shows, for the period 1957 to mid 1970s, total debt (red line on chart) was increasing close to the growth rate of national income (blue line on chart), despite war debt for WW II, Korea and Vietnam.

But, in the last several decades total debt has zoomed up, up and away – – growing much faster than national income. As of beginning 2011 total debt was $57 Trillion ($40.8 trillion private household/business/financial sector debt PLUS $16.2 trillion federal, state and local government debt).”

The Federal Reserve Board released its survey results in June 2012. It focused on changes from 2007 to 2010.

The report states:

“The Federal Reserve Board’s Survey of Consumer Finances (SCF) for 2010 provides insights into changes in family income and net worth since the 2007 survey. The survey shows that, over the 2007–10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent; median income had also fallen slightly in the preceding three-year period (figure 1). The decline in median income was widespread across demographic groups, with only a few groups experiencing stable or rising incomes.Most noticeably, median incomes moved higher for retirees and other nonworking families. The decline in median income was most pronounced among more highly educated families, families headed by persons aged less than 55, and families living in the South and West regions. Real mean income fell even more than median income in the recent period, by 11.1 percent across all families. The decline in mean income was even more widespread than the decline in median income, with virtually all demographic groups experiencing a decline between 2007 and 2010; the decline in the mean was most pronounced in the top 10 percent of the income distribution and for higher education or wealth groups. Over the preceding three years, mean income had risen, especially for high-net-worth families and families headed by a person who was self-employed.

The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent (figure 2).”

See full report:Federal Reserve Board–Survey of Consumer Finances

This tracks with figures released by the Congressional Budget Office–Trends in the Distribution of Household income, comparing 1979 and 2007. Continue reading »