Recent reports show that the middle class is declining, both in size and wealth, while the economy appears to be sliding toward a major recession in 2013.
According to a report from the Congressional Budget Office (CBO) released Wednesday, the country will enter a recession if Congress allows a series of tax increases and budget cuts to become a reality in January.
The report predicts that the economy will shrink by 2.9 percent in gross domestic product in the first half of 2013, and according to The Washington Post, unemployment could shoot up to 9.1 percent by the end of 2013.
As of June 2012, the unemployment rate was at 8.2 percent nationally, 6.9 percent in Maryland and 5.5 percent in the D.C. Metropolitan suburbs, according to data from the Bureau of Labor Statistics.
A Pew report shows that the once-stable middle class has shrunk significantly over the past decade. In 1971, the middle class consisted of 61 percent of adults, but in 2011 that number was down 10 percent.
The middle class is diminishing in more than just size – according to the Pew report, the middle tier took in 45 percent of the nation’s household income in 2010, a 17 percent decrease from 1970. The upper class took in 46 percent in 2010, compared to 29 percent in 1970, the report says.
“Wherever we looked, it was worse off now than 10 years ago, and by some measures, this period is setting historic records for not only gloominess but economic impact,” Rich Morin, a senior editor at the Pew Research Center, told U.S. News.
According to U.S. News, middle class residents had an income between $39,000 and $118,000 in a family of three in 2010, down from a range of $42,200 and $127,000 in 2000.
The White House has said, according to The Post, that the CBO report reinforces the need for a bill that ensures middle class families don’t see tax hikes in 2013, and the Democratic Senate passed a bill to stop tax increases only for those with an income less than $250,000.
What do you think has contributed to the diminishing middle class? What does 2013 hold for middle tier residents? Tell us in the comments.