Americans have the most downbeat assessment of personal progress in last 50 years

In spite of the fact that the middle class is finding it more and more difficult to maintain their standard of living they are upbeat about the future and the future for their kids. Why they should think this way is rather difficult to fathom. There is more and more global competition for dwindling resources. To maintain the standard of living of the U.S. in the present fashion is hardly possible. I just wonder what will happen when the excessive spending of middle income and poorer Americans becomes quite unsustainable. There is already a negative savings rate.
As the evidence from the article shows the middle class is going nowhere. With labor split and weak and global capital in the driver's seat unless there more global solidarity of labor what we will have is a race to the bottom at least in the near term. Inflation in food prices and in energy is likely to make the situation of the poor and middle classes globally much worse for the next generation.



A Pew poll finds that USers have the most downbeat assessment of
personal
progress in the last 50 years...


http://pewsocialtrends.org/pubs/706/middle-class-poll
http://pewsocialtrends.org/assets/pdf/MC-Middle-class-report.pdf

Inside the Middle Class: Bad Times Hit the Good Life
Executive Summary

This report on the attitudes and lives of the American middle class
combines results of a new Pew Research Center national public opinion
survey with the center's analysis of relevant economic and demographic
trend data from the Census Bureau. Among its key findings:

Fewer Americans now than at any time in the past half century believe
they're moving forward in life.
Americans feel stuck in their tracks. A majority of survey respondents
say
that in the past five years, they either haven't moved forward in life
(25%) or have fallen backward (31%). This is the most downbeat
short-term
assessment of personal progress in nearly half a century of polling by
the
Pew Research Center and the Gallup organization.
When asked to measure their progress over a longer time frame,
Americans
are more upbeat. Nearly two-thirds say they have a higher standard of
living than their parents had when their parents were their age.

For decades, middle income Americans had been making absolute progress
while enduring relative decline. But since 1999, they have not made
economic progress.

As of 2006 (the last year for which trend data are available), real
median
annual household income had not yet returned to its 1999 peak, making
this
decade one of the longest downturns ever for this widely-accepted
measure
of the middle-class standard of living. Over a longer time period, the
picture is much brighter; since 1970, median household income has risen
by
41%.

However, this long-term prosperity has not spread evenly. The upper
income
tier (households with annual incomes above 150% of the median) has
outperformed the middle tier (households with annual incomes between
75%
and 150% of the median) -- not just in income gains, but also in wealth

accumulation. From 1983 to 2004, the median net worth of upper income
families grew by 123%, while the median net worth of middle income
families
grew by just 29%. In effect, those in the middle have been making
progress
in absolute terms while falling behind in relative terms.


About half of all Americans think of themselves as middle class. They
are a
varied lot.
Some 53% of adults in America say they are middle class. On key
measures of
well-being -- income, wealth, health, optimism about the future -- they

tend to fall between those who identify with classes above and below
them.
But within this self-defined middle class, there are notable economic
and
demographic differences. For example, four-in-ten Americans with
incomes
below $20,000 say they are middle class, as do a third of those with
incomes above $150,000. And about the same percentages of blacks (50%),

Hispanics (54%) and whites (53%) self-identify as middle class, even
though
members of minority groups who say they are middle class have far less
income and wealth than do whites who say they are middle class.


For the past two decades middle income Americans have been spending
more
and borrowing more. Housing has been the key driver of both trends.

A new single family house is about 50% larger and existing houses are
nearly 60% more expensive (in inflation adjusted dollars) now than in
the
mid 1980s. Goods and services that didn't exist a few decades ago --
such
as high definition television, high speed internet, and cable or
satellite
subscriptions -- have become commonplace consumer items. And the costs
of
many of the anchors of a middle class lifestyle -- not just housing,
but
medical care and college education -- have risen more sharply than
inflation.

As expenses have risen, middle income Americans have taken on more
debt,
often borrowing against homes that, at least until recently, had been
rising rapidly in value. The median debt-to-income ratio for middle
income
adults increased from 0.45 in 1983 to 1.19 in 2004. Ratios have also
increased for upper and lower income adults, but not by as much.

At a time when these borrow-and-spend habits have spread, Americans say
it
has become harder to sustain a middle class lifestyle.

Nearly eight-in-ten (79%) respondents in the Pew Research Center survey
say
it is more difficult now than five years ago for people in the middle
class
to maintain their standard of living. Back in 1986, just 65% of the
public
felt this way.
The current economic slowdown and uptick in prices are taking a bite
out of
the family budget. Slightly more than half of middle class respondents
say
they've had to tighten their belts in the past year. Roughly the same
proportion expect to make more cutbacks in the year ahead, and a
quarter
say they expect to have trouble paying their bills. About a quarter of
those who are employed worry they could lose their job.

Nonetheless, the American middle class is optimistic about the future.
Most
are confident that their quality of life in five years will be better
than
it is now. And, gazing farther ahead, most expect their children to do
better in life than they themselves have done.

Economic, demographic, technological and sociological changes since
1970
have moved some groups up the income ladder and pushed others down.

Winners include seniors (ages 65 and older), blacks, native-born
Hispanics
and married adults. The income status of all of these groups improved
from
1970 to 2006. Losers include young adults (ages 18 to 29), the
never-married, foreign-born Hispanics and people with a high school
diploma
or less. All of these groups have seen their relative income positions
decline.

Most middle class adults agree with the old saw that the Republican
Party
favors the rich while the Democratic Party favors the middle class and
the
poor.
Nearly six-in-ten (58%) middle class survey respondents say the
Republican
Party favors the rich, while nearly two-thirds say the Democratic Party

favors the middle class (39%) or the poor (26%).

...

More at URL above.

In US rich are getting richer, faster!

It seems that the rich are not facing any problems because of the U.S. expenditures on defence. No doubt many actually profit. One wonders about the long term problems of such expenditures. Will personal and government debt ultimately cause problems in the US economy.
There seems little movement towards any narrowing of income gaps in the US. No doubt the market moves in mysterious ways its wonders to perform and it would be sinful to try to change that! Of course markets and crony capitalism have little to do with one another as any libertarian would tell me!

NY Times, December 15, 2007
Report Says That the Rich Are Getting Richer Faster, Much Faster
By DAVID CAY JOHNSTON

The increase in incomes of the top 1 percent of Americans from 2003 to
2005 exceeded the total income of the poorest 20 percent of Americans,
data in a new report by the Congressional Budget Office shows.

The poorest fifth of households had total income of $383.4 billion in
2005, while just the increase in income for the top 1 percent came to
$524.8 billion, a figure 37 percent higher.

The total income of the top 1.1 million households was $1.8 trillion,
or
18.1 percent of the total income of all Americans, up from 14.3 percent

of all income in 2003. The total 2005 income of the three million
individual Americans at the top was roughly equal to that of the bottom

166 million Americans, analysis of the report showed.

The report is the latest to document the growing concentration of
income
at the top, a trend that President Bush said last January had been
under
way for more than 25 years.

Earlier reports, based on tax returns, showed that in 2005 the top 10
percent, top 1 percent and fractions of the top 1 percent enjoyed their

greatest share of income since 1928 and 1929.

The budget office report takes into account a broader definition of
income than tax returns that is known as comprehensive income. It
includes untaxed Social Security benefits, welfare, food stamps and
part
of the value of Medicare benefits, giving a fuller picture of incomes
at
the bottom than tax data.

Much of the increase at the top reflected the rebound of the stock
market after its sharp drop in 2000, economists from across the
political spectrum said. About half of the income going to the top 1
percent comes from investments and business.

In addition, Congress in 2003 cut taxes on long-term capital gains and
most dividends, which advocates said would encourage people to turn
untaxed wealth into taxable income. Some economists have said that the
increase in incomes at the top is illusory and is in good part simply
converting untaxed assets into taxed income to take advantage of
reduced
tax rates.

The Congressional Budget Office report made no attempt to explain the
increases in income in its annual report on effective federal tax rates

paid by people at different income levels.

Asked how much of the increase at the top was from the tax cuts rather
than market gains, Peter R. Orszag, the budget office director, said,
“I
can’t give you an answer to that because we just don’t know.”

Chris Frenze, Republican staff director for the Congressional Joint
Economic Committee, said the increase in top incomes is much more
modest
if viewed over longer time periods. Since 2000, he said, the average
income of the top 1 percent has risen $97,900, or 6.7 percent, the same

percentage increase this group had from 1992 to 1997.

Jared Bernstein, an economist at the Economic Policy Institute in
Washington who characterizes the Bush administration’s policies as
YOYO
economics, based on You (Are) On Your Own, said the differences in
income growth explained why so many Americans have told pollsters that
they are feeling squeezed.

“A lot of people justifiably feel they are working harder and
smarter,
they are baking a bigger and better pie, and yet their slice is not
growing much at all,” Mr. Bernstein said. “It is meaningless to
middle-
and low-income families to say we have a great economy because their
economy looks so much different than folks at the top of the scale
because this is an economy that is working, but not working for
everyone.”

At every income level Americans had more income, after adjusting for
inflation in 2005 than in 2003, but the increases ranged from almost
imperceptible for the poor to modest for the middle class and largest
for those at the top.

On average, incomes for the top 1 percent of households rose by
$465,700
each, or 42.6 percent after adjusting for inflation. The incomes of the

poorest fifth rose by $200, or 1.3 percent, and the middle fifth
increased by $2,400 or 4.3 percent.

The share of all federal taxes paid by the top 1 percent grew, but only

slightly more than half the rate of their growth in incomes because of
the tax rate cuts. The top 1 percent paid 27.6 percent of all federal
taxes in 2005, up from 22.9 percent in 2003, while the share paid by
the
middle fifth of taxpayers declined to 9.3 percent from 10 percent in
2003.

The share of their income that the top 1 percent paid in all federal
taxes and in income taxes fell. The total tax rate dropped 1.8
percentage points, to 31.2 percent, from 2003 to 2005 while their
average income tax rate declined one percentage point, to 19.4 percent,

largely because of the cuts in taxes on capital gains and dividends.