Shrinking Middle Class Research Paper

The Shrinking Middle Class and its Affect on the Economy Over the past couple of years, the middle class has slowly been shrinking, and because of this, it has a negative effect on the economy. Consumer spending makes up 70% of the economy, and the less money people have, mostly likely they will not spend as much, which does not stimulate the economy.
Although there is no one definition for the middle class, it can be made into three sub-categories; the upper middle class, the middle class, and the lower middle class. By statistics from the United States Department of Labor, the upper middle class includes $135,000 to $600,000 AHTI (Annual Household Taxable Income), the middle class includes $95,000 to $140,000 AHTI, and the lower middle …show more content…
But, the lower middle class makes up 34% of the country's population, which is also the same percentage as the working class, whose income are between $20,000 and $40,000 AHTI (So 68% of incomes are between $20,000 and $100,000). Even though the middle class can be anywhere between $50,000 and $600,000, The median income in the U.S. in 2014 is only $53,891, which is actually higher than it was in 2011 ($51,913), but it is still less than it was in 2009 ($55,589). The U.S. median income is still 4.8% lower than it was before the recession in 2009, and even 5.9% lower than it was in the beginning of 2000. This means that 50% of Americans earn more than $53,891, and 50% earn less than $53,891. These numbers would mean that 50% of Americans are in the upper lower class or lower, and it might seem …show more content…
Well, although the median income seems to be going up, and the economy is at an all time high, despite the 2008 recession, 62% of Americans still believe the U.S.’ economic conditions are doing poorly. The unemployment rate still remains fairly high in the country also, at …… This is due to the economy still not performing at full potential. Since 1980, real GDP and potential GDP have been typically in line with each other, but since the great recession, there has been a gap between the two larger than any before. Real GDP is very slowly getting in line with potential GDP, but it still far away then any previous gap before 2008. Because of this, households, businesses, and even governments are not spending as much as they should for businesses to be working at their full potential. Although the country is still far below its potential, the potential has gone up in the last four years since 2010. So how long would it take for the economy to get back on track? This chart shows that if the economy was growing by 3.5%, it would only take four years for the economy to get back on

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