Cost of living strains the middle class

Many METARs are (ahem) older and may have lost sight of the changing stresses on middle class families.

https://www.wsj.com/opinion/why-everything-feels-more-expensive-c6d216a8?mod=hp_opin_pos_1

Why Everything Feels More Expensive

Middle-class Americans have more income than they did 50 years ago, but the squeeze is real.


By Roland Fryer, The Wall Street Journal, May 18, 2026


Since 1975, median family income has risen by more than half, from about $68,000 to $106,000 in inflation-adjusted terms—a gain of roughly $38,000. But much of the difference comes from one of the most important social shifts of the past half-century: Labor-force participation among married mothers rose from about 45% in 1975 to 72% in 2025.

But for families with young children, much of that $38,000 gain is spoken for before it ever hits the bank account. A year’s worth of mortgage payments, adjusted for inflation, has risen from about $16,000 in 1975 to $25,000 in 2024, an increase of $9,000. Workers now contribute about $7,000 a year in premiums for family health insurance, roughly double the real cost in 1999. Full-day care for a single child typically runs $6,500 to $15,500, depending on age and location, a cost most families in the 1970s didn’t incur. Add it up and these three expenses absorb most of the $38,000 gain, leaving many families—especially those with young children or in high-cost cities—with roughly the same disposable income their parents had, despite earning more.

The culprit is structural, not political: Economists call it Baumol’s cost disease. Productivity gains tend to concentrate in goods—cars, clothing, televisions, food—as technology steadily drives prices down. But many services, like teaching a kindergarten class, change little over time. As incomes rise, wages must rise across the board; otherwise employees leave for higher-paying sectors. Labor-intensive services grow more expensive not because something went wrong, but because everything else became more productive… [end quote]

Goods inflation fell because of cheap imports and increased efficiency due to the development of robots and computers. But services inflation – medical care, insurance, child care, education – continued to inflate faster than goods inflation.

Now that most mothers are working the cost of child care eats up a large part of the extra income. And families with two workers are one job loss away from disaster.

Real disposable income rose steadily but a lot of it is incorporated into daily life which we take for granted. It’s not fun to spend more on insurance, medical and child care. Meanwhile, home ownership is out of reach for many.

Wendy

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Give them what they voted for – good and hard. And that’s true if you’re voting GOP or corporate DEM, the bipartisan culture of corruption is the root cause of the problem.

intercst

5 Likes

Somehow the consumer keeps chugging along.

Gas price spikes across the country have hammered shoppers’ wallets and driven inflation higher. Consumer sentiment has plunged, while interest rate cut expectations have dropped.

One would have thought Target — with its well-documented operating struggles in 2025 — would have reported a horrid first quarter.

Instead, it reported a $0.28 earnings beat on Wednesday. Sales increased in all merchandise departments, led by beauty, hardlines, and food. Store traffic increased. The company even jacked up its full-year sales outlook and said it expects sales to increase in each quarter of the year.

DB2

Bob,

Courtesy of Google, careful not to fool yourself.

Total credit card debt has reached roughly $1.25 trillion. While overall debt saw a seasonal dip immediately following the holidays, balances are still up roughly 5.9% compared to the same time last year, and the number of people falling behind on payments is rising at an alarming rate. [1, 2]

The current credit card debt landscape in May 2026 includes several key points:

  • High Balances: Americans currently owe $1.252 trillion in credit card debt, according to the latest

Federal Reserve Bank of New York

Household Debt Report.

  • Seasonal Shifts vs. Annual Growth: Although credit card balances dipped by $25 billion from the fourth quarter, this reflects the standard post-holiday cooldown rather than a long-term reduction. Overall, balances remain significantly higher than in previous years.
  • Delinquencies Rising: The percentage of Americans falling behind on consumer debts has reached record highs. Delinquency rates for credit cards and auto loans are approaching levels last seen during the 2008 financial crisis.
  • Long-Term Debt: According to Bankrate’s latest

Credit Card Debt Report

, about 61% of cardholders who carry balances have been in debt for at least a year.

For a closer look at these statistics, review the full

Federal Reserve Bank of New York

reports or dive into the

LendingTree

credit card debt statistics for a detailed monthly breakdown.

AI responses may include mistakes.

[1] American Families Hit Record Levels of Financial Distress as Millions Fall Behind on Credit Cards, Auto Loans, and Student Loans - Protect Borrowers

[2] Credit card debt dips to $1.25 trillion — but maintains ‘K-shaped’ pattern, New York Fed research shows

[3] https://finance.yahoo.com/personal-finance/banking/article/household-debt-edges-up-to-new-high-but-credit-card-balances-dip-183325142.html

[4] Bankrate’s 2026 Credit Card Debt Report | Bankrate

[5] 2026 Credit Card Debt Statistics | LendingTree

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At the same time, don’t ignore real world results. While Target is not one of the dollar stores, it also isn’t a high end store. I don’t know where you’d put it in the K-economy structure, but the stores did quite well the last three months.

DB2