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Can the Middle Clss Be Saved

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CAN THE MIDDLE CLASS BE SAVED?

ANDREW NELSON
MGMT 6400
PROFESSOR R. BING
JUNE 14, 2014
CRITICAL ANALYSIS-ACADEMIC LITERATURE

The severe economic downturn known as the Great Recession of 2008, has spurred the hastening of the challenges of the middle class in America. It has also highlighted the deepening chasm between the mass populace and the income elite. The resultant course has carved out significant consequences and changes that have widened the gap. The critical question is: what can we do to bridge that gap? According to research by a Citigroup a team of analysts in 2005, it was reported that the average U.S. consumer had essentially retreated relative to the patterns of growth for the U.S. economy. The 2005 report clearly outlined that America was composed of two disparate groups. Simply put, the two groups are the wealthy and everybody else. From an investment standpoint it was further noted that the rich were really the only group that mattered, and that everybody else had very little impact in terms of involvement with investment capital. From an analytical standpoint, the spending habits and savings rates of the second group had little to no impact because all of the influential factors for the American economy were coming from the top. In other words, the wealthiest 1% of households earn as much each year as the bottom 60% put together. Furthermore in terms of wealth, the top 1% possessed as much wealth as the bottom 90%. Looking at the data over time, each year the top 1% gained a greater share of the nation’s wealth and it was the top 1% of the population that essentially became the function of the growth in future returns of investment productivity and results. The Citibank analytical team classified the wealth stratification in the United States as a “plutonomy”, defined as a state where “economic growth...

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