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Chrisman's Corner: Upper, Middle, and Lower Don't Go Away

It doesn’t matter that politicians and others wish that economic classes would go away. They won’t. JMAC’s brokers see all types of classes applying for loans with varying degrees of success. But as we head into 2016, let’s see if we can learn anything from the current economic situation in the U.S. – and therefore any impact on mortgage rates for our brokers’ clients.

Middle class Americans comprise less than half (49.9 percent) of the nation’s population, down from 61 percent in 1971, according to Pew Research Center. In this study, middle class Americans are classified as households earning between two-thirds to two times the nation’s median income, or from $41,900 to $125,600 for a three-person family.

As our brokers know, the national income disparity has contributed to the growing gap between the lower and upper class as more Americans begin to shift into the higher ranges of the upper class and lower ranges of the lower class. In other words, the gap between the haves and have-nots continues to widen. While the middle class has been declining, the ranks of the upper class are growing more quickly. Since 1971, the share of senior citizens in the upper class has increased roughly 27 percent, and married couples with no children and black Americans have also realized a large gain during that same time period.

 Upper households saw their median (remember: median means half above and half below) income increase 47 percent to $174,600 from 1970 to 2014, while the middle class only experienced a 34 percent increase to $73,400 and the lower class received a 28 percent growth to $24,074. The upper class also now controls 49 percent of the nation’s aggregate income, increasing from 29 percent in 1970. The middle class once held 62 percent of the nation’s income in 1970, but that share has dropped to 43 percent. The median net worth of upper class families also doubled from 1983 to 2013, reaching $650,100; the median net worth of the middle class increased 2 percent to $98,100; and the lower class saw their wealth drop 18 percent to $9,500.

As more households struggle due to a combination of stagnant wage growth and increased living expenses, the economic polarization has contributed to a wider gab between the rich and poor, and a dwindling middle class.

JMAC offers loan programs that fit various economic situations – ask your Account Executive.