Economic Relief for Low- and Middle-Class Households Could Take Years, Economist Says

A recent report found that more than half of people in the United States are economically insecure and limited in their ability to get ahead.
Economic Relief for Low- and Middle-Class Households Could Take Years, Economist Says
A customer shops for meat at an Andronico's supermarket in San Anselmo, Calif., on June 8, 2022. Justin Sullivan/Getty Images
Mark Gilman
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Low- and middle-class households are still struggling to keep up with inflation and household debt, according to multiple new surveys. To make matters worse, economic relief for these families could take years to be realized, according to expert commentators.

A recent report from the Urban Institute, using its True Cost of Economic Security (TCES) measure as a guide, found that more than half of the people in the United States are economically insecure and limited in their ability to get ahead. The TCES looks at modern families’ costs versus the financial resources available to their households.

The study also polled families with all adults under the age of 65 with children in the home, and found that a greater percentage (58 percent) fell below their TCES economic health threshold.

The National True Cost of Living Coalition (NTCLC) praised the methodology of the Urban Institute’s survey, which aligned with its own survey commissioned in the summer of 2024.

“This measure, for the first time, truly helps us understand what every American needs to become economically secure,” Jennifer Jones Austin, CEO and co-chair of the National True Cost of Living Coalition (NTCLC), said in a statement.

“Because it goes beyond looking just at basic needs, this new measure fundamentally shifts the discourse to what resources families need to thrive, not just survive.”

The NTCLC survey found that 65 percent of Americans earning more than 200 percent of the federal poverty level ($62,400 for a family of four) also said they were struggling financially.

Another report released in September by the Financial Health Network also paints a bleak picture of the financial health of the American family.

According to the Financial Health Pulse 2024 U.S. Trends Report, 70 percent of U.S. households remain “financially unhealthy with day-to-day financial realities worsening for many.”

Among the relevant findings: Between 2023 and 2024, those spending less than their income decreased from 49 percent to 47 percent, the proportion of middle-income households that were financially vulnerable increased to 14 percent from 11 percent, and fewer respondents were paying bills on time or had short-term savings.

“This year’s Pulse shows that we may only be one economic fluctuation away from a vast swath of Americans, especially moderate- and middle-income households, being unable to meet their day-to-day financial obligations,” said Jo Christine Miles, director of the Principal Foundation.
One of the few moderately positive economic surveys in the past month was issued as part of The Primerica Household Budget Index (HBI), a monthly indicator measuring middle-income families’ purchasing power for food, gas, utilities, and health care. But the good news was clouded by the fact that the families polled were not necessarily better off; they have just returned to where they were in 2019.

According to the study, purchasing power for middle-income Americans just recently moved above 2019 levels. Primerica’s HBI rose to 103.1 percent of that level in October, up 3.4 percent from October 2023, and up from 102.7 percent in September 2024, the highest since January 2021.

If the HBI index is above 100 percent, the purchasing power of middle-income families is more potent than in the baseline period. They may have extra money left over at the end of the month that can be applied to things such as entertainment, additional savings, or debt reduction. If it is under 100 percent, households may have to reduce overall spending to levels below budget, reduce their savings, or increase debt to cover expenses.

The HBI uses January 2019 as its baseline, setting HBI at 100 percent for that month. The index hit its low of 86.7 percent in June 2022, when inflation had peaked at a 40-year high of 9.1 percent.

Primerica economic consultant Amy Crews Cutts said in the report: “Had the inflation wave not happened, the HBI would be about 112%. This difference explains a lot about low consumer sentiment that even though conditions have improved, households have made almost no financial progress in 5.5 years of hard work.”

Government Spending Cuts Are Key to Bringing Economic Relief

Peter St Onge, an economic research fellow at The Heritage Foundation, told The Epoch Times that cutting government spending is key to bringing down inflation, thus restoring economic stability for lower- and middle-class families.
The latest report from the Bureau of Economic Analysis shows that the Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation measure, jumped by 0.2 percent in October to 2.3 percent, up from 2.1 percent in September, indicating that inflation remains sticky.

People in the United States are currently facing significant obstacles that hinder their ability to grow their businesses, Onge said.

“If the government cuts spending, it returns the economy to the people,” he said.

Onge believes the spending cuts proposed by President-elect Donald Trump’s Department of Government Efficiency could reduce inflation by “10 to 30 percent.”

However, Onge also warned that it will take time for Americans to feel the economic relief.

“In economics, things take a long time to happen. For example, any Fed (Federal Reserve) rate cuts will take 18 months to make a difference. The economic changes Trump wants to make could take 12–24 months before we see a significant difference,” he said.

Onge said that the financial situation for middle-class Americans is relatively stable but the lower class, particularly young people, is facing severe challenges.

“The rate of young people living with their parents is at Great Depression levels,” he said.

“Are people suffering right now? There is a lot through any metric you look at. But everything is relative. It’s not at a Bangladesh level, because it’s not like people aren’t able to eat. But they’re moving in with their parents. The free market economy needs to grow at 5 percent or more and if it doesn’t, then the government is getting in the way.”

Mark Gilman
Mark Gilman
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Mark Gilman is a media veteran, having written for a number of national publications and for 18 years served as radio talk show host. The Navy veteran has also been involved in handling communications for numerous political campaigns and as a spokesman for large tech and communications companies.