MIDDLE CLASS BLUES - As if Americans Didn't Already Know, IMF Report

"Sobering IMF report on U.S. economy cites dwindling middle class, growing income equality" PBS NewsHour 6/22/2016

Excerpt

SUMMARY:  A new outlook issued Wednesday by the International Monetary Fund drew some startling conclusions about the U.S. economy.  The report asserts that the American middle class is gradually shrinking, the seven-year economic recovery is starting to slow and the pronounced income equality divide may become worse without intervention.  Judy Woodruff talks to Christine Lagarde of the IMF for more.

JUDY WOODRUFF (NewsHour):  The American middle class is shrinking and struggling.  The six-year-long economic recovery is showing some signs of slowing.  And the pronounced wealth divide in the U.S. may get worse without bigger steps.

That warning was part of a new report issued today about the U.S. economy by the International Monetary Fund.

I sat down with its managing director, Christine Lagarde, at IMF headquarters here in Washington earlier today to hear more of her concerns about what’s happening to the middle class and the poor, and what could be done about it.

Managing Director Christine Lagarde, thank you for talking with us.

CHRISTINE LAGARDE, Managing Director, International Monetary Fund:  Pleasure.

JUDY WOODRUFF:  So, this latest report from the IMF looks at the American economy, says it is in good shape overall, shows resiliency, but then it goes on to point out a number of factors that provide concern for the future.

And one of them has to do with the shrinkage of the American middle class.  What do you and your colleagues see, and what concerns you?

CHRISTINE LAGARDE:  We are seeing a shrinking of the middle class.

If you look at the size of the middle class in 1975, it was roughly 60 percent of total population.  If you look at the middle class today, it is about 50 percent.  So, that’s a significant decline of the middle class.  And it is an economic issue, because the middle class has always been the consumption force of this nation.

The upper class doesn’t spend as much.  The lower class doesn’t have as much to spend.  So, the maximum impact in terms of consumption is generated by the middle class.