Middle Class Shrinks, Recession Looms
Size and income level of America's middle class have diminished significantly in past decade, according to reports.
Recent reports show that the middle class is declining, both in size and wealth, while the economy appears to be sliding toward a major recession in 2013.
According to a report from the Congressional Budget Office released in August, the country will enter a recession if Congress allows a series of tax increases and budget cuts to become a reality in January.
The report predicts that the economy will shrink by 2.9 percent in gross domestic product in the first half of 2013.
Unemployment could shoot up to 9.1 percent by the end of 2013 as well, reports The Washington Post.
In greater Elkridge, some business owners have said the recession's effects were minimal. The president of Lancaster Foods told The Packer, a produce industry trade publication, that having Washington and government offices nearby kept Jessup, where Lancaster is headquartered, in a "pretty strong area."
That's on trend with the national unemployment picture. As of June 2012, the unemployment rate was at 8.2 percent nationally, 6.9 percent in Maryland and 5.5 percent in the D.C. metropolitan suburbs, according to data from the Bureau of Labor Statistics.
Even so, the Pew report shows that nationally, the once-stable middle class has shrunk significantly over the past decade in size and income.
In 1971, the middle class consisted of 61 percent of adults. In 2011, that number was down to 51 percent.
According to the Pew report, the middle tier took a pay cut as well.
In 2001, median household income for the middle class was $73,000, said U.S. News & World Report, and in 2011, that number was down to $69,500.
“Wherever we looked, it was worse off now than 10 years ago, and by some measures, this period is setting historic records for not only gloominess but economic impact,” Rich Morin, of the Pew Research Center, told U.S. News & World Report.
According to U.S. News, middle-class residents had an income between $39,000 and $118,000 in a family of three in 2010, down from a range of $42,200 and $127,000 in 2000.
The White House has said, according to The Washington Post, that the Congressional Budget Office's report reinforces the need for a bill ensuring middle-class families don’t see tax hikes in 2013, and the Democratic Senate passed a bill to stop tax increases only for those with an income less than $250,000.
What has contributed to the diminishing middle class? Tell us in the comments.