The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation
America’s middle class is weary.
After nearly five years of high prices, many middle-class earners thought life would be more affordable by now. Costs for goods and services are 25% above where they were in 2020. Even though the inflation rate is below its recent 2022 high, certain essentials like coffee, ground beef and car repairs are up markedly this year.
The American middle class encompasses a broad cross section of workers that includes white-collar office employees, nurses and plumbers, although there is no universally accepted definition. Pew Research Center defines the middle class broadly as having a household income between about $66,666 and $200,000, depending on where they live. Perpetual sticker shock is making many within the group feel worse about both their own finances and the future of the country. They are hunting for bargains and spending more carefully.
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The University of Michigan’s consumer sentiment survey showed that 44% of middle-income respondents said their financial situation was worse than it was a year ago, while 23% said it was better, based on a three-month average ending in September. Those who feel worse off overwhelmingly said it was because of higher prices.
Their gloomy outlook was in contrast with the most affluent families, who are enjoying stock-market gains and powering the economy with their spending. Many in the middle class also have stock investments and retirement funds, but they are more apt to feel pinched, and resentful of rising costs of everything from the price of a steak to a new couch.
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When the pandemic hit, many in the middle class were able to save more money after getting government stimulus checks and an expanded child tax credit. By the start of 2022, people in the 40% to 80% range of income percentiles had more than $500 billion in extra savings, according to Moody’s Analytics. Inflation started to pick up in spring 2021 and peaked at 9.1% in June 2022. By the beginning of 2025, the middle class had spent down all their extra savings, often to keep up with higher costs, according to Moody’s. Wage increases weren’t much help—they were consumed by inflation, too.
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