The American middle class is facing the biggest blow to its wealth in a generation. Despite the staggering hit, the middle class is still going into midterm elections richer than it has ever been, thanks to a decade of “cheap money” and the wealth it afforded.
The Middle-Class Fortune
Bloomberg News conducted a study that paired new wealth data with a Harris Poll. The survey measured the attitudes of the 100 million middle-class adults that are vital to the economy and its politics ahead of elections.
Experts have long stated that the middle-class fortune determines the political fate of most U.S. leaders. The American middle class is responsible for nearly half of the consumption expenditures in the United States, and its members are far more likely to vote than those further down the ladder in society.
Interviews were conducted with both retirees and first-time homebuyers. Both expressed anxiety about the current and future state of the economy but remained optimistic about their own finances and the future their children will grow up into.
More Than Just a Salary
Being middle class in America is about more than just a salary or wages. It's about the economic security that is driven by wealth and the ability to access it and pass it on to the next generation. Earlier this year, the average real wealth of the American middle class peaked at $393,300, the highest it has ever been.
Although this consumer class is better placed to absorb the fallout of a looming recession, reports show they are also more nervous about their financial cushions and the economy than they have ever been.
These anxieties are timed perfectly with the upcoming election, where Joe Biden's Democrats are fighting to maintain their thin majorities in Congress.
Reports show that the average middle-class adult in America at the peak earlier this year was more than $120,000 wealthier than when Donald Trump took office in 2017. The gains that the middle class experienced fueled the pandemic boom that resulted in an uptick of home renovation projects and helped families to weather the rising consumer prices.
Falling From Grace
Berkeley economists estimate that since the March peak, the “middle 40%”-the members of the population whose wealth falls in the 50th to 90th percentile-have seen their wealth fall around 7%. That hit alone is the biggest since the 2007-09 global financial crisis.
Consumers are likely to cut back on their purchases as financial situations become more strenuous. Despite the fact that there are many societal issues on the ballot, economic anxieties are on the forefront of voters' minds going into the midterm elections.
The Harris Poll of middle-class voters found that while 86% say their personal financial situation is good right now, 1 in 5 expect things to get worse in the next year. Twice as many say they feel either stressed or anxious about the current state of the economy as those who reported feeling calm.
Only around 26% of respondents reported feeling optimistic. There is a partisan divide to this issue as well. Republicans are reportedly more stressed and are less optimistic about the economy than their Democratic counterparts.
This article was produced and syndicated by Wealth of Geeks.
Max Marvelous has coached over 250 Millennials to help take the stress out of money. When Max is not coaching, you'll find him reading financial books, indoor cycling, or visiting local pawn shops looking for swiss-made watches.