How Much Does The Middle Class Shrink

1517 Words Apr 21st, 2015 7 Pages

ABSTRACT A relatively large size of the middle class is the guarantee of a healthy and balanced economy. Many researchers observe more and more polarized economy in United States. To measure how much does the middle class shrink and what changes in their spending pattern, I may find in what aspects do they shrink and why. Based on analysis of data mainly from US Census Bureau and Labor Statistics, I examine the status quo of middle class by analyzing real median household income, polarization, income inequality and Lorenz curve. I also try to explain the reasons behind by regression analysis. By studying the consumer spending behaviors after crisis, I could see directly how households respond and how they alter their
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Judging from the current situation, slow growth is going to be prolonged for a while due to the aftermath of the financial crisis while the middle class shrinking phenomenon is likely to be continued. With this circumstance, the polarization between the poor and the rich is expected to increase. Thus I think analyzing the middle could be the key factor to reduce imbalance between the classes as well. Through this paper, I 'm going to analyze the changes of the middle class and their spending patterns after the financial crisis. Since the global financial crisis, the middle class has been shrinking significantly. Here I 'm going to focus more on the middle and analyze their weight changes and spending patterns after the financial crisis since they are powerful market force. They can directly contribute to the growth of economy. Besides a strong middle class is a prerequisite for robust entrepreneurship and innovation, a source of trust that makes business transactions more efficient, a bulwark against credit booms and busts, and a progenitor of virtuous, forward-looking behaviors, such as valuing education. In the end, by comparing the economic indicators after the recent crisis, I will briefly see if the other countries have the same issues or these are special phenomenon of American economy. To support my claim, I 'm going to
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