America’s middle class is facing a devastating decline, as the impact of the Federal Reserve’s actions during the pandemic becomes increasingly clear. While the trillions of dollars injected into the financial system may have benefited the wealthy, they have also caused a significant increase in the cost of living for average Americans. As a result, inflation has been rising at a much faster pace than paychecks, leading to a difficult financial situation for many households.
In fact, recent data from the Census Bureau revealed that in 2022, real median household income experienced its largest decline in over a decade. Median household income dropped by 2.3 percent from the previous year to $74,580. This decrease is even worse than the 2.2 percent decline seen during the pandemic. In fact, it is the fourth worst year on record since 1985.
The primary reason for this decline in income is attributed to high inflation. The measure of inflation used to calculate real income rose by 7.8 percent, the highest inflation rate since 1981. Unfortunately, unlike in the past, the country cannot rely on a rapid recovery to alleviate this situation. The excessive amount of money injected into the system is now resulting in a heavy price that Americans must pay.
This economic reality is particularly disheartening for middle-class parents like Jessica McCabe, who vented her frustrations in a viral TikTok video. McCabe acknowledged that struggling is a normal part of life, but she expressed her sadness at seeing her adult children continuously sliding down despite their hard work. She recounted her own experience of eventually seeing a light at the end of the tunnel after struggling, whereas it seems like today’s youth are endlessly sinking.
This sentiment is echoed by many Americans, as over 60 percent of the population currently live paycheck to paycheck. The situation has become so dire that even former Ford CEO Mark Fields recently stated that individuals need to earn more than $100,000 a year just to afford a new car. As a result, many people are unable to replace their vehicles, leading to an increase in the average age of cars on the road.
To make ends meet, Americans are increasingly turning to debt. Credit card debt surged during the second quarter of the year, with the average American household now having $10,170 in credit card debt. However, financial institutions are starting to tighten their lending standards, making it more difficult for individuals to access credit.
This economic downturn has resulted in a significant increase in homelessness in the country. According to preliminary figures, there has been an 11 percent increase in homelessness in one year, the highest ever recorded. Cities like Oakland and San Francisco have become hubs for homelessness, with the issue exacerbated by drug abuse.
It is clear that the economy is not “doing just fine” as some may claim. Homeless encampments are becoming more prevalent, and communities are distressed by the growing issue. In Austin, Texas, for example, shocking footage exposed a park filled with liquor bottles, needles, and junk, highlighting the desperate situation faced by those living on the streets.
As the economy continues to deteriorate, the situation is only expected to worsen. The middle class will continue to shrink, and more individuals will be pushed into the impoverished class. The impact of the Federal Reserve’s actions during the pandemic is being keenly felt by everyday Americans, and it is essential for policymakers to address these issues urgently to prevent further economic decline.
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