US economy is sounding another alarm; middle class suffers again

By Zhou Qing Source:Global Times Published: 2019/10/23 20:54:32

House for sale

US September home sales which fell unexpectedly could be a warning sign that the American middle class is struggling to purchase homes since their wages cannot outpace inflation. 

The US' seemly robust economic data has long been bragged about as a political asset by US President Donald Trump. Those numbers may not only hide the country's economic bubbles but also conceal the misery of the US middle class.

The US inflation rate may appear to be holding below 2 percent. The Consumer Price Index for all items except food and energy rose 2.4 percent year-on-year in September, with the index for rent rising 0.4 percent. That could be an indicator of higher rents and pricier homes. 

Median home values in the US went up 4.8 percent over the past year as of the end of September, according to data from Zillow. In contrast, real average weekly earnings for American workers rose less than 1 percent in that period.

These figures all indicate people in the US are getting farther from home ownership. High mortgage rates in recent years and increasing rents have increasingly squeezed the middle class in the US. 

As the inflation rate is on the rise, the US Federal Reserve keeps feeding more liquidity into the US economy. In a low savings rate society like the US, houses are often the middle class' biggest assets. If consumer prices and property prices continue going up, times will get harder for the middle class. 

Instead of chanting that the Chinese economy is having "the worst year in 57 years," the US should mind its own turf. Smearing others is not a panacea for the economic problems and misery of its own people.

The author is a reporter with the Global Times.

Posted in: INSIDER'S EYE

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