Why the Upper Middle Class Is Feeling the Economic Squeeze
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Here's your money briefing for Thursday, September 1st. I'm J.R. Whelan for The Wall Street Journal. People in nearly all income brackets have felt the effects of this year's high inflation and volatile stock market. But people in the upper middle class in particular have felt it more than any other group.
For this group especially, 2022 has been a reversal of fortunes. This group of Americans really made a lot of money in the stock market. They were able to pad their savings quite a bit. And what we're seeing this year is that they have had to start dipping into their savings
On today's show, we'll talk with our reporter Dionne Roboan for a closer look at what's squeezing the upper middle class. And we'll hear from a Texas resident about how 2022's economy has changed his financial habits. That's after the break.
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The downturn in the economy isn't hitting everyone evenly. Many lower income families have seen big wage increases, and the nation's wealthiest families have been insulated from rising inflation. But the upper middle class is, well, caught in the middle. They felt the brunt of the economic instability and stock market volatility that have defined 2022 so far. In a moment, we'll speak with one relatively well-off Texas resident about his experience. But first, let's bring in WSJ reporter Dion Raboan for more on how the economy is affecting this income class. Dion, thank you very much for being with us. Yeah, no, thank you so much for having me. So Dion, first of all, let's make sure we're on the same page about who we're talking about.
How is the upper middle class segment of the population defined?
Sure. The Federal Reserve defines that group as individuals making between $75,301 and and $127,300 a year. So they make more money than at least 60% of other households, but less money than the top 20% of earners.
So how does 2022 compare to the past two years for this income group?
For this group especially, 2022 has been a reversal of fortunes. This group of Americans really made a lot of money in the stock market. They were able to pad their savings quite a bit. And what we're seeing this year, at least through the first quarter, and that's the latest data that we have, is that they have had to start dipping into their savings. Their stock gains have been eroded more significantly than any other group. and overall they've been able to put away less in savings than any other group except for the poorest Americans, defined as folks making up to $28,400 a year. I spoke with one gentleman who had actually come out of retirement essentially and was back to working three days a week because his retirement portfolio had suffered such significant losses that he didn't want to make withdrawals from it and he just figured,
The better solution there is to go back to work and live off my working income rather than to dig into this money where I've lost and seen significant losses in my portfolio.
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