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Middle Class Feels the Pain of Ailing Economy
by
findingDulcinea Staff
Rising unemployment and inflation have impacted the purchasing power of Americans. Applications to charity organizations and for government aid have spiked.
30-Second Summary
More than 28 million Americans are applying for food stamps this year, the highest number since the program’s inception in the 1960s.
The sub-prime mortgage crisis is the key cause of economic strife, writes British paper The Independent, and the downturn “is starting to hit the country in its gut. Getting food on the table is a challenge many Americans are finding harder to meet.”
An estimated 50,000 jobs were lost in the United States in March, pushing up the unemployment rate to approximately 5 percent.
Income earners in the middle class are struggling to keep up with home payments and inflation for staple items and services.
Government aid programs such as HEAP, which subsidizes fuel oil costs, often cannot support middle-class families because they earn above a certain threshold. This is forcing some families to resort to charitable organizations to meet the gap.
"We're seeing folks that may own a home, who may be working two or three jobs, but are not able to cover all the costs that they've incurred,” said Gwen O’Shea, a social services worker for the Health and Welfare Council of Long Island.
Economists agree that indicators show the United States is in a recession. Robert Parks went as far to say a “Bush depression” is ahead. Others, such as Ed Yardeni, say "basic capitalism and materialistic instincts" will prevail.
See Associated Press coverage
The sub-prime mortgage crisis is the key cause of economic strife, writes British paper The Independent, and the downturn “is starting to hit the country in its gut. Getting food on the table is a challenge many Americans are finding harder to meet.”
An estimated 50,000 jobs were lost in the United States in March, pushing up the unemployment rate to approximately 5 percent.
Income earners in the middle class are struggling to keep up with home payments and inflation for staple items and services.
Government aid programs such as HEAP, which subsidizes fuel oil costs, often cannot support middle-class families because they earn above a certain threshold. This is forcing some families to resort to charitable organizations to meet the gap.
"We're seeing folks that may own a home, who may be working two or three jobs, but are not able to cover all the costs that they've incurred,” said Gwen O’Shea, a social services worker for the Health and Welfare Council of Long Island.
Economists agree that indicators show the United States is in a recession. Robert Parks went as far to say a “Bush depression” is ahead. Others, such as Ed Yardeni, say "basic capitalism and materialistic instincts" will prevail.
See Associated Press coverage
Headline Links: ‘USA 2008: The Great Depression’
Rising fuel costs have been one factor in higher food prices, which have risen by 6 percent over the past 12 months, according to the Department of Agriculture. “The amount of food stamps per household hasn't gone up with the food costs. Our clients are finding they aren't able to purchase food like they used to,” said Dayna Ballantine, a Des Moines, Iowa, food bank worker.
Source: The Independent
Susan Koeppen advises consumers to buy in bulk and clip coupons to alleviate the impact of food inflation, the highest seen in 20 years.
Source: CBS News
Background: ‘Middle class Long Islanders turn to food pantries’
Rising mortgate rates have forced families in Long Island, New York, who earn incomes up to $70,000 per year to resort to the local food bank. Bill, a Nassau County employee, says, “I sat here at home and argued with my wife about who's going.…It’s embarrassing.”
Source: Newsday
findingDulcinea reported in February that America’s credit woes were widening, despite a Wall Street surge spurred by separate efforts from the U.S. government and Warren Buffett.
Source: findingDulcinea
Analysis: Economy swimming upstream
Salon writes that economists are no longer questioning whether the country is in a recession but when it started: November or December. Economist Nouriel Roubini wrote last week, “It is now clear that the U.S. and global financial markets are experiencing their worst financial crisis since the Great Depression.” He advises Americans to economize, but adds that, according to the textbook definition, America "is nowhere close" to the 10 percent or greater decline in GDP over two quarters that characterizes a depression.
Source: Salon
Last fall, economists were predicting a mild market downturn; however, they’re now saying we’re headed toward a full-blown recession. Economist Robert Parks stated that there is a 60 percent likelihood of a “Bush depression.” Ed Yardeni, president of Yardeni Research in Great Neck, New York, is extremely concerned about the economic situation, but predicts only a “modest recession,” and believes that America’s "basic capitalism and materialistic instincts" will soon reassert themselves.
Source: Christian Science Monitor
The Wall Street Journal notes that the Fed cannot fight unemployment and inflation at the same time, as they require conflicting remedies. The economy seems to be approaching stagflation, which occurs when a period of low or negative growth coincides with high inflation. Although inflation is higher than expected, it is far below the levels it reached in the 1970s, which was the last time the United States experienced stagflation. However, rising oil prices could push prices up further, stoking inflation.
Source: The Wall Street Journal (subscription may be required)
The Los Angeles Times draws parallels between the Great Depression of the 1930s and the current economic crisis. But the article also stresses the differences between then and now: “U.S. unemployment reached 25 percent during the Depression; last month it was reported at 4.8 percent. The international industrial economy was a shambles in the ’30s. Today it is coming off a global boom.”
Source: Los Angeles Times (registration may be required)
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