Authored by Michael Snyder via The Economic Collapse blog,
America’s middle class is being systematically eviscerated. When the Federal Reserve pumped trillions of dollars into the financial system during the pandemic, most Americans didn’t realize what that would do to them.
That money certainly made the wealthy a whole lot wealthier, but it also dramatically increased the cost of living for the rest of us. So now inflation has been rising much faster than paychecks have, and the cost of living has become exceedingly oppressive. In fact, last year we witnessed the largest decline in real median household income in more than a decade…
The official tally is in and it is brutal: Americans suffered the biggest drop in household income in 2022 in a dozen years.
Real median household income was $74,580 in 2022, a drop of 2.3 percent from the prior year, the Census Bureau said Tuesday.
This is the biggest drop in household income since 2010, when it household income fell 2.6 percent. That means it is worse than the pandemic decline of 2.2 percent. It is the fourth worst year in records going back to 1985.
In 2010, the U.S. economy was just coming out of the horrible recession that we had just experienced in 2008 and 2009.
Those were not fun times.
And the times that we are moving into will not be fun either.
We are being told that “high inflation” is the primary reason why real median household income is falling…
The declines were driven by high inflation. The measure of inflation that is used to calculate real income rose 7.8 percent, the worst inflation since 1981.
1981 was a long time ago.
But at that time, the U.S. economy quickly recovered under the leadership of President Ronald Reagan.
We will not be so fortunate this time around.
Our leaders flooded the system with giant mountains of money, and almost everyone cheered as they were doing it.
But now we are paying the price.
Recently, a “Gen X mom” named Jessica McCabe made headlines all over the world when she posted a video on TikTok in which she expressed how frustrating it is to watch her adult children deeply struggle in this economy…
“I am so tired of feeling helpless as a parent,” McCabe started off the video. She acknowledged that her son was 25 and her daughter was 28 and explained: “I thought by teaching them what I learned, which is you work hard, you get a good job, you’re gonna get the things in life that you need, right? Worked for me, why wouldn’t it work for them?”
Unfortunately for all of us, the rules have changed.
What worked in the 1980s and 1990s simply does not work today.
In her video, she acknowledged that struggle is a part of life, but she also said that it is just so disheartening to see her kids “get further and further down” no matter how hard they try…
She continued: “I see them struggling, and before my generation comes at me, yes, I understand struggling as a part of life. We all struggle, but there’s a difference between struggling and drowning. So we struggled, and it was tough. But you know what, we made it. We knew there was a light at the end of the tunnel with our struggle. It seems like kids today, no matter how much they struggle, they just get further and further down.”
Sadly, this is the reality of life for most Americans today.
More than 60 percent of the nation is currently living paycheck to paycheck, and former Ford CEO Mark Fields just admitted to CNBC that someone needs to make more than $100,000 a year just to be able to afford a new vehicle these days…
The former Ford CEO said that a consumer has to “make over $100,000 to afford a new car.” As a result, the price of vehicles is starting to come down, which is leading to an inventory correction.
“Vehicles are getting older, they need to be replaced.”
Americans are keeping their vehicles longer than ever, and that is because most of us simply cannot afford to replace them.
As I have discussed previously, Americans are increasingly turning to debt to help make ends meet from month to month.
Credit card debt surged dramatically during the second quarter, and this is starting to become an enormous problem…
American households now have an average of $10,170 credit card debt, as record numbers say they are worried about being cut off from access to loans.
Data from the New York Federal Reserve shows nationwide credit card debt swelled by $43 billion in the second quarter of the year – the second largest increase on record.
Of course there is a limit to how much debt that U.S. consumers can take on, and financial institutions are starting to say “no” a lot more often…
Meanwhile a separate survey by the Fed revealed 60 percent of respondents found it more difficult to access credit – the highest level since the data series began in June 2013.
I warned my readers that the flow of credit would start to get tighter and tighter.
And now it is happening.
Right now, so many formerly middle class Americans have been pushed into what I call “the impoverished class”, and many that were formerly poor now find themselves pushed out into the streets.
In fact, according to the Wall Street Journal we have witnessed the largest increase in homelessness ever recorded this year…
The United States has seen the biggest ever spike in homeless people living on the streets – as preliminary figures showed a record 11 percent increase in one year.
There are nearly 600,000 rough sleepers across cities and towns in America, and the jump from 2022 to 2023 so far is the highest since the government started tracking the data in 2007, according to the WSJ.
Places like Oakland and San Francisco in California have become hotbeds for homelessness, as people living on the streets are like ‘drug tourists’ who arrive to have easy access to narcotics.
So please don’t believe anyone that tries to convince you that the economy is doing just fine.
It most certainly is not.
Homeless encampments are popping up like mushrooms all over the nation, and many communities are not pleased about this at all.
For example, just check out what has been happening in Austin, Texas…
Shocking footage has exposed the scene in an Austin park filled with liquor bottles, needles, Narcan and junk ‘as far as the eye can see,’ as a homeless encampment continues to grow.
The videos were of the West Bouldin Creek Greenbelt were posted on Monday by activist Jamie Hammonds, who reports from the Texas capital on the X page @DocumentingATX.
‘Another Greenbelt destroyed here in Austin… nothing but trash and junk as far as you can see… this is absolutely horrible,’ Hammonds said, adding that the encampment was at least the size of a football field, and you could smell it ‘even before you enter the greenbelt.’
As the economy continues to crumble, things are going to get even worse.
And as things get worse, the middle class will continue to shrink.
It is almost as if we are all playing a really bizarre game of musical chairs.
With each passing day, even more spots in the middle class are being removed from the game, and the ranks of “the impoverished class” continue to grow larger and larger.
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Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
