During a recession, who is it that gets hit the hardest? The average American, aka, the middle class. This is the majority tax-paying class, the group that are the most at risk when economic conditions decrease for they are the ones in the middle; the ones who are most entangled in the economic systems being employees dependent on corporations for income and health care, and carrying considerable debt on mortgages, vehicles and credit cards. This is a generalization, but I think a pretty fair generalization (and can also be said for the Canadian economy).
This means that when stimulus is pushed into the economy (the Federal Reserve and Government leverage their monetary and fiscal policies to inject the economy with more money, cheaper credit, and new tax policies designed to help a limping economy grow with more consumer and commercial spending), it reaches the people at the top first. These people are the heads of banks and corporations and it is then their responsibility to push the stimulus down through the levels of the economy and population mainly through offering easier access to loans, credit and creating new jobs. In theory this works, though certainly a lot of the stimulus is lost on the way down as the Federal Reserve and Government can’t force what is done with the new money and policies (often it is big business and wealthy investors who benefit most), and it does take time for the middle class to feel any financial betterment.
Now finally, after nearly a decade of economic stimulus and expansion, the middle class are feeling some love and it’s time for a semi-celebration.
On Tuesday census data was released “showing that median household income in the US rose a whopping 5.2 percent in 2015, to around $56,500. According to that data, incomes rose for black families, white families, Hispanic families and Asian-American families. It rose for young people and in households headed by middle-aged adults and older people. In short, the improvement was across the board to a remarkable degree.”
5.2 per cent is significant as it is considered fairly strong income growth, but it is still less than the growth that the typical American family experienced back in the mid-1990s, and is still less than the median household made in 2007 before the financial crisis. The New York Times calls these gains “an important milestone for the economic expansion that began in 2009. For the first time in recent years, the benefits of renewed prosperity are spreading broadly.”
Read the original article, The Economic Expansion Is Helping the Middle Class, Finally, by Neil Irwin, and published in The New York Times’s Upshot on Tuesday, September 13 2016. Unless otherwise cited, all quotes are from this article.
Feature image via One Way Ticket featuring model Lily Donaldson photographed by Skye Parrott, Dossier Journal #10 Fall/Winter 2012.
