Middle class dysphoria – What does the new American Dream look like? Inflated college tuition, lower home ownership rates, and compressed wages.
The American Dream was always tied to economic prosperity. The ability to work and save for a respectable retirement seemed cornerstones to this vision of middle class success. The idea that future generationswould have it better seemed to also be part of this vision of economic prosperity. The last two decades have seen a dramatic shift to this vision. The struggle to stay in the middle class is getting more difficult since more are being pushed into the poor or working poor categories. The recovery has been largely an odd accounting function courtesy of bailouts to the banks and massive government spending. Today, we have the largest number of Americans on food stamps. Those seeking to follow their desire to get a better education are saddled with a minefield of student debt and subpar institutions that simply look to steal their money and give them a piece of paper that is hardly recognized in any professional context. The home ownership rate, the symbolism of the American Dream is drifting further into the shadows.
The consequences of the housing bubble
The current home ownership rate across the country is now back to levels last seen in 1996:
What does this mean for the middle class that once relied on housing as the cornerstone for the American Dream? At the core, it has shaken the faith of many because housing was supposed to be a sure bet. Every year, your home value would go up and you subtly built equity. That assurance has been wiped away in the current aftermath of the housing bubble. The housing market had been a steady investment for many decades providing this bedrock of stability. This all changed of course when investment banks in conjunction with government backed guarantees co-opted the market and turned it into just another commodity to speculate and destroy. Keep in mind many of these investment banks and government cronies sought to increase home ownership across the nation and have only done the opposite. Glass-Steagall was repealed back in 1999 and here we are with a home ownership rate now back to 1997 levels and an economy that is still in disarray for working and middle class Americans.
The Case Shiller Index reveals a lost decade in home values:
Yet this destruction in illusory and real wealth in real estate has impacted the net worth of most Americans. The biggest asset most Americans have is in their property and it has been one of the worst performing items in the last decade.
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