Wall Street Journal: The American middle class is collapsing economy

After nearly 5 years of successive rises in prices, the middle class in America – according to an extensive report published by the Wall Street Journal – appears to be living between two parallel pressures: daily costs that are rising without stopping, and a general feeling that life has become “more difficult than it was even a year and a half ago,” according to Hawally Frew, director of communications at a college in Atlanta.

The newspaper confirms that the prices of goods and services have become 25% higher compared to 2020, and that the living standards to which millions of families have become accustomed are now threatened.

Although the inflation rate has declined from its peak in 2022, the prices of coffee, ground beef, and car repairs have risen clearly this year, and this has deepened the feeling of financial exhaustion, the newspaper says.

The suffering of the middle class in America

The Wall Street Journal is based on the definition of the Pew Research Center, which places the middle class in an income range between $66,000 and $200,000 annually, depending on the place of residence.

Despite the breadth of this range, all those whose incomes fall within it feel what the newspaper calls a “persistent price shock,” a shock that has prompted many to actively search for cuts, restrict spending, and rearrange priorities.

The newspaper refers to the results of the University of Michigan Consumer Confidence Survey, which showed that 44% of those belonging to the middle class said that their financial situation today is worse than last year, compared to only 23% who said it has become better, and most of the pessimists attribute this directly to “high prices.”

Retail companies and the restaurant sector in America are affected

The newspaper quotes data from the recent earnings reports of major American companies, revealing that the middle class has become a pressing factor on retail sales:

• Fast food chain Wing Stop said that middle-income customers have now begun to reduce their purchases, as have those with lower incomes.
• Target store announced a significant decline in spending on non-essential goods such as clothing and home decor.
• On the other hand, Walmart recorded strong sales after the influx of consumers from all income levels in search of suitable prices.

This change in consumer behavior – confirms the Wall Street Journal – has become a clear feature of the American economy during the current year.

Personal stories that express the condition of the middle class

The newspaper reviews a series of personal testimonies that express the depth of the crisis, as a mother of a child who works full time and is raising her child alone says: “I need to know where the light is at the end of the tunnel.”

The mother explains that after purchasing a house, she had to face an increase in the mortgage due to an interest rate of 6.5%, in addition to an increase in the real estate tax by about a thousand dollars and an increase in the insurance premium by 600 dollars. To cut expenses, she canceled dental insurance, reduced her home insurance coverage, and turned to a side hustle managing a rental property.

Other families in Connecticut had to keep the lights off most of the time to conserve electricity.

High prices in America wipe out savings

The newspaper notes that the middle class was in a strong position during the pandemic years. Government support checks flowed in, and savings rose by more than $500 billion between 2020 and the beginning of 2022.

But by 2025, the newspaper confirms, citing Moody’s Analytics, that most of these savings will be “completely wasted,” as families used them to keep up with the rising prices of food, rents, and services.

Even the wage increases did not help because “Successive waves of inflation “I swallowed it.”

Political pressure is renewed

The newspaper says that the cost of living crisis prompted voters in the recent November elections to choose candidates who promised to address the “affordability crisis,” at a time when the same factors harmed Joe Biden’s campaign in 2024, and are today putting pressure on President Trump’s satisfaction ratings.

The newspaper quotes Harvard University professor Stephanie Stancheva: “People feel that their standard of living is declining.”

A protracted crisis with no clear horizon

Wall Street Journal data and reports show that the main problem is not the rise in prices alone, but rather the long duration of inflation, the impact of which has accumulated until it has exhausted families that were once among the most stable groups in America.

Today’s middle class – according to the newspaper’s analysis – is looking for “fresh economic air”, while bills continue to come, its purchasing power is shrinking, and there are no clear signs of an imminent breakthrough.