How Much Does The Middle Class Shrink

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CONTENTS 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 spending accordingly to the new economics environment. In the end, I also compare the trends of other countries after the recent financial crisis to see how the phenomenon effects and spreads globally. INTRODUCTION After 1980 era, people have experienced more economic crisis ever and faced more severe results. The results show that the income of most households has reduced, and the polarization is more serious than ever. In the years following financial crises, the most influential factors for this phenomenon are continued slow growth economy, high unemployment, labor share of income fall, stagnant income, the decreasing power of labor and labor unions, income inequality and rates of poverty increase. Researchers also

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