The declining wealth of the middle class, 1983–2016

Abstract

This article considers trends in wealth at the middle and top of the distribution, with a particular focus on the period around the Great Recession. It illustrates that leverage rates of middle class families relative to high-wealth families were beneficial to relative rates of return of middle class families for most periods since 1983 but was extremely detrimental during the Great Recession. It also considers the savings rates over time among high-wealth and middle class families, showing that dissaving slowed the recovery in wealth—especially among the middle class. Differential leverage was also a key factor explaining wealth inequality trends.