Why Americans are feeling poorer even though they’re not (John Burn-Murdoch, 12/07/25, Financial Times)Green’s figure raised more than a few eyebrows among economists who study these sorts of questions for a living — $140,000 is almost 70 per cent higher than the median US household income. A series of careful analyses of the data he invoked to make his case revealed mis-steps in his calculations that led him to a figure far higher than any reasonable method could produce. But his article nonetheless struck a chord with some, who felt that even if the precise numbers were off they pointed to a larger societal truth: the increasing sense of financial precarity among the middle class.
As someone who crunches numbers for a living, the temptation would be to ally myself with the former camp and dismiss the appeal to vibes, but I happen to think both responses are legitimate. Having dug into the data, I can provide some evidence-based squaring of the circle.
Where Green and his supporters are on to something, is the share of income the middle class spends on essential categories, which has risen significantly over both the long and shorter term. Add together the increased portion of incomes accounted for by healthcare (up by 3 percentage points over recent decades), childcare (up 2 points), housing (up 4 points) and food (up 1 point in recent years), and total spending on these unavoidable costs has climbed from just over a third of middle class disposable income to half of the total.
But this squeeze from essentials has not led to an increase in the share of income American households spend in total across all categories, which is broadly in line with the historical average — even slightly down on where it was when all of these things were cheaper in real terms. This has been made possible primarily by dramatic falls in the price of clothes, electronics, household appliances and other mass-produced tradeable goods, which have more than offset the rise in essential services.
Notably, this pattern is not isolated to the US; it’s common across high-income countries. And there’s a good reason. Rather than the increasing burden of essential costs suggesting living standards are being eroded, if we take a step back, it’s an indication that people across society are becoming more prosperous.