The American Dream seems to be fading, as the US middle class struggles to maintain a foothold. Between 1970 and 2014, middle-income households shrank from 58% to 47% of all US households. Until 2000, moving into the ranks of upper-income households accounted for most of the attrition. But since then, the number of middle-income households that slipped into lower income status has outpaced those rising to higher income levels. This “hollowing out” eats away at consumption, a major driver of economic growth in the United States. This powerful article by economist Ali Alichi provides a thoughtful look at the consequences of a dwindling middle class. getAbstract recommends it to policy makers and economists.
In this summary, you will learn
- What has brought about the gradual erosion of the American middle class,
- How this decline has already affected US economic growth and
- Which other countries face this problem.
About the Author
Ali Alichi is a senior economist at the International Monetary Fund.