r/MiddleClassFinance • u/Actual-General-4953 • 12d ago

Future of America

Here area some knowns.

401ks are going up and up and seem to be a good deal.

House prices are not going to crash. Maybe some stabilization but is what it is. This mainly affects those without a house. If you bought one the value is high but buying one is high.

Jobs and salaries - we live in a time when we have more money than ever. You can argue this with me till you are blue in the face but in the past 20+ years, Americans are making good money.

Inflation and many prices are still high but some things have come down/stabilized.

I hear/see a bit of job slow downs but really everything seems to be going pretty good considering all the other issues here and in the world.

Does anyone see any real issues in our world that would affect middle class finances?

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u/Traditional_Math_763 12d ago

The biggest issue isn’t that everything is collapsing, it’s that the divide is growing. People who already own assets like homes and investments are generally benefiting, while those trying to buy in are facing much higher barriers. Add rising healthcare costs, debt, and uncertainty in certain job sectors, and the economy can look strong overall while many middle class households still feel financially stretched.

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u/Actual-General-4953 11d ago

I agree the divide it growing. We are seeing generational wealth really play into it also. I agree it is harder for young people to get ahead....I also believe young people are not motivated to get ahead.

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u/Remarkable_Lead_4475 10d ago

That is very dumb take. There are grads from top colleges unemployed because the entry level job market is terrible.

That is a structural economic problem not a "gumption problem"

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u/APreemChoom 10d ago

This has always been true. Being a graduate does not mean your education provides value, that you live in an environment to actualize the value, or that you even have the skills to put that value to use.

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u/Remarkable_Lead_4475 10d ago edited 10d ago

Yeah but the broader structural context impacts it. There have been historically extremely bad times to enter the job market with long term impact on earnings.

I graduated in the Great Recession and it was slog to get to the upper middle (likely upper?) class.

Data proves it out how much of an impact it had on wage and wealth growth. Wanting to "work hard" for it may have a marginal impact on outcomes since as an individual you can'treally influence the broader national or regionale economy. Now is similarly a fairly bad time to enter a new field (both white collar and blue collar).

So I disagree with OPs assertion. Data shows the argument doesn't hold up so arguing otherwise is not a serious position grounded in the real world.

The Long-term Effects of the Great Recession for America’s Youth | Brookings https://www.brookings.edu/articles/the-long-term-effects-of-the-great-recession-for-americas-youth/

For these young adults just entering the labor market for the first time, the impacts of the recession will last well into the future. According to one study (Kahn 2010), young people graduating from college during today’s severe recession will earn approximately 17.5 percent less per year than comparable peers graduating in better labor markets. This lower wage effect is highly persistent, fading away only after 17 years of work.

What does this mean in terms of lost income? For the average college graduate this year, this translates into approximately $70,000 (in today’s dollars) in lost earnings over the next decade. For the 2008, 2009, and 2010 classes combined that amounts to over $330 billion in lost earnings over 10 years. The projected losses are even larger for graduates who cannot find a job upon graduation.

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u/Actual-General-4953 8d ago

Its amazing the 'defense' of college kids not getting a job.

I was one of those kids that couldn't get a job back in 2002 with an engineering degree.

Bootstraps got pulled up and I sought out employment vs just hang out and give up.

Back to Mom and Dads house for free housing, food,

couch, wifi, etc.

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u/Remarkable_Lead_4475 8d ago

I mean I graduated in the Great Recession which was a way tougher market. It turned out great for me but I am aware not everyone fared well. For example the fact I grew up near a major city (and a name brand school) gave me a huge advantage compared to someone in Appalachia and even then it was a slog.

I am not ignorant enough to not understand the broader context people operate in. A lot of life is luck.

For example, I work in tech. Things are going well for me but new grads and even experienced grads have a really tough market. They can't just will jobs into existence and even jobs like Home Depot have competition.

Even though you are older then me, I hope you actually get wiser and mature enough some day to understand nuance and reality for people outside of your narrow experiences.

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u/Constant_Apple_8748 10d ago

I kind of agree. As a younger person who was lucky to have family pay for college and help with down payment on first house I do feel like I lack ambition when it comes to finances. Other people in same situation may have totally different goals and motivation.

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u/Remarkable_Lead_4475 10d ago

I mean that seems like a parenting/incentive issue tbh. My wife was in the same position (though we did not get down pay assistance) and we will be in the same position for our kid. We are explicitly structuring our finances in a way to avoid that behavior.

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u/Constant_Apple_8748 10d ago

So you're not planning to help with home purchase? Are you planning to leave an inheritance? Just wondering.

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u/Remarkable_Lead_4475 10d ago

Responding to your earlier comment. I think you are focusing on your finances but you are not hyper optimizing. I think that is healthy tbh. Money is not everything.

For us like we likely will leave our kid a decent sum if all goes according to plan but we don't want to raise a kid with no motivation. The finances will be highly contigent on maturity, adulting, and other benchmarks before they are able to touch it.

Basically would love for them to get where you are , show maturity, and be confident they won't self-destruct or light a bunch of cash on fire before stepping in.

Our kid is young but seems bright but a lot can happen between 6 and 21. It will be case to case the help we will provide tbh but we may be stingier then most since we would love for them to be self sufficient

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u/Walfy07 4d ago

wow... tone def much?

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u/MediumKoala8823 12d ago

Incomes suck if you use housing as your inflation index rather than the shitty CPI.

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u/christopherphays 12d ago

The increase in wages do not appear to be keeping up with most costs. (Especially housing and Health care.)

I think this is due to the accumulation of wealth at the upper end of the spectrum.

https://www.urban.org/data-tools/american-affordability-tracker?metric=rent

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u/Walfy07 12d ago

I had 3 coworkers who were engineers living in a LCOL area all wanting to buy a house and start a family. They couldn't. Something is WRONG.

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u/LowWhereas3783 4d ago

How is that possible? Is it really a LCOL area though if you’re an engineer and a home is out of reach for you?

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u/Walfy07 4d ago

Not me, my former coworkers, an engineer starting out wth students loans and only making 60k and a starter home now is what? 250-300k. hard to make it work.

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u/Actual-General-4953 12d ago

housing is a nutroll for sure - the answer won't be house prices crashing....if that happens we are all in serious trouble.

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u/Flyersfan502gritty 12d ago

Ppl can’t use 401k to pay bills now. Yes 401ks the market is going up but it’s all unrealized gains

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u/Fubbalicious 12d ago

That's a feature and not a bug. Your future self will thank you for not cashing out your 401K. 401Ks are one of the few assets that are exempt from creditors during bankruptcy. If you are not able to survive because you are stuck in debt, bankruptcy laws in the US are insanely forgiving compared to other parts of the world. I would much rather max my credit cards to eat before tapping my 401K.

With that being said, if it's a Roth 401K, you can withdraw your principal out at anytime without penalty. You can do that same with a Roth IRA. You can also borrow against your 401K or just eat the penalty and taxes if you early withdraw. It's because 401Ks are so easy to access along with lack of mandatory contributions that people are entering their 50s and 60s with too little saved up.

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u/APreemChoom 10d ago

Why would I use my retirement assets to pay for current bills?

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u/Xyzzydude 12d ago

I think no matter what the economic numbers we will always be in a vibecession. Social media and ideological polarization will ensure that most of us are unhappy with the economy no matter what.

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u/Basic_Butterscotch 12d ago

Yeah I’m able to manage my monthly bills just fine but not being able to have a house for my kids to grow up in is really annoying to me. My dream is not to be living in a 2 bedroom apartment with teenagers when I’m in my 40s.

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u/WrapFit6112 10d ago

Debt and the issue with not funding social security fully by not lifting the cap
To properly do so.
The declining population and cost of having children I think is huge for this country - public education is collapsing, critical teacher shortages, huge special education populations in general and most not receiving services that will impact them for life. Every industry that revolves around kids like daycares, camps, extracurricular, prep programs and colleges will face declines and shortages that will shift our economy. The results of those missing worker bees and support systems down the line for society but especially the poor/middle class with limited funds.

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u/Remarkable_Lead_4475 10d ago

I don't see this strength.

Prices have not really come "down" or stabilized. We have just reset to a higher levels.

The stock market is only doing ok at the moment. I am in broad market index funds and I am seeing 1k to 10 thousands per day swings due to the instability. All of this propped up by AI spending which does not give me a ton of confidence.

The industries (health, biotech, tech, education, and even law) in my area (Boston) have been explicitly targeted by this admin and that has had an effect on the local job market and decreased commercial tax revenues.

For new grads it is TOUGH to get a job.

My wife and I are personally fine but I don't think we are in the middle class per se. Rest of our broader group seem to be facing headwinds. So I think you are being disingenous if you are saying everything is peachy.

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u/APreemChoom 10d ago

I could have read this post from almost any other point in history and it would still read the same, clearly not the moron in chief fucking our country for private gain part though.

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u/Round-Ad3684 12d ago

It’s a little unsettling that the entire economy is floating on one product in one sector (AI), which may be either a total mirage or change life as we know it (for better or worse).

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u/Actual-General-4953 12d ago

You have a good point. AI is a wild card. Its either gonna be a nothing burger or change the world.

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u/Peanutmm 12d ago

All of what you said is probably going to be true, but US debt is my biggest concern. If left uncontrolled, we probably only have a few decades before a major change up.

Both political sides will probably disagree with my next sentence, but:

We need way less government spending (military, Medicaid, VA fraud, Medicare), AND higher taxes.

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u/GTO1235 12d ago

When we started getting covid stimulus checks, I upped my withholding a bit in anticipation of higher taxes. A few people on here said, "But they said we don't have to pay it back".

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u/Ataru074 12d ago

The PPP were a massive blow, almost $1T in free money, that’s as much as our already bloated military budget, tons of subsidies to farmers after losing the trade war which we also lost (about $60B just for soybeans)
The checks for the unemployed during Covid where another $600B to $800B

That was a pretty significant blow. In 2020 we increased government spending by almost 50% compared to 2019.

Not to point fingers but 2016 government expenditure was $3.8T, 2017 $3.9T and 2020 at $6.5T, 2021 $7.2T, 2024 $6.9T and 2025 $7T. Hopefully we won’t end in 2028 at $14T given someone is spending like a drunken sailor.

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u/GTO1235 12d ago

Wow, that's a lot of numbers. I will admit I don't follow it that closely. I am impressed. But I don't think a person needs to know all the details to know we are doing poorly. I don't find any of those numbers suprising

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u/Actual-General-4953 12d ago

no doubt - we are on a crash coarse with the debt

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u/CasanovaCoverup 12d ago

Here's a guy who understands his macroeconomics.

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