The American middle class – is it shrinking ?

What’s the definition of middle class and its role in today’s society:

The American middle class by one definition consists of an upper middle class, made up of professionals, salaried professionals and managers – distinguished by exceptionally high educational attainment as well as high economic security; and a lower middle class, consisting mostly of semi-professionals such as skilled craftsmen and lower-level management. The lower middle class needs two income earners in order to sustain a comfortable standard of living, while many upper middle class households can maintain a similar standard of living with just one income earner.

The American middle class commonly have a comfortable standard of living, significant economic security, considerable work autonomy and rely on their expertise to sustain themselves. Those individuals, are characterized by conceptualizing, creating and consulting. Middle class values tend to emphasize independence, adherence to intrinsic standards, valuing innovation and respecting non-conformity. Politically more active than other demographics, college educated middle class professionals are split between the two major parties. Their income varies considerably from near the national median to well in excess of $100,000. They are very influential, as they encompass the majority of voters, writers, teachers, journalists, and editors

Most societal trends in the US originate within the American middle classes

The American middle class IS slowly shrinking. It’s getting short changed in every way – from tax codes being skewed towards the 1%, system loopholes, tax shelters, tax-evasion, big government, to retirement contribution caps.


Fact: The top 5 percent of earners accounted for almost 40 percent of personal consumption expenditures in 2012, up from 27 percent in 1992. Largely driven by this increase, consumption among the top 20 percent grew to more than 60 percent over the same period.

top 5 percent chart

Even more striking, the current recovery has been driven almost entirely by the upper crust. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent, (according to the economists Steven Fazzari, of Washington University in St. Louis, and Barry Cynamon, of the Federal Reserve Bank of St. Louis).

The effects of this phenomenon are now rippling through one sector after another in the American economy, from retailers and restaurants to hotels, casinos and even appliance makers.

In response to the upward shift in spending, big stores and restaurants are chasing richer customers with a wider offering of high-end goods and services, or focusing on rock-bottom prices to attract the expanding ranks of penny-pinching consumers.

For example, luxury gambling properties like Wynn and the Venetian in Las Vegas are booming, drawing in more high rollers than regional casinos in Atlantic City, upstate New York and Connecticut, which attract a less affluent clientele who are not betting as much, said Steven Kent, an analyst at Goldman Sachs.  Read full report here.



Take charge of your financial strategies to keep up with current regulations, economic evolution, and tax laws. Open retirement account(s), use tax-exempt funds, save rigorously, contribute religiously.


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