Lael Brainard: Is the middle class within reach for middle-income families?

Speech by Ms Lael Brainard, Member of the Board of Governors of the Federal Reserve System, at the "Renewing the Promise of the Middle Class" 2019 Federal Reserve System Community Development Research Conference, Washington DC, 10 May 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

It is good to be here at the Federal Reserve System's Community Development Research Conference. This year, our conference is focusing on renewing the promise of the middle class, a topic that goes to the heart of the American dream and underpins the vibrancy of our democracy and society.

What Does It Mean to Be Part of the Middle Class?

Before I dig into the data, I want to touch on what it means to be a part of the middle class, recognizing aspirations differ from person to person. From a purely economic perspective, being middle class commonly means having financial security and the ability to invest for our futures and for our children. In turn, having a strong middle class implies that families with average incomes have the purchasing power to consume and the savings to invest. So a strong middle class is often seen as a cornerstone of a vibrant economy and, beyond that, a resilient democracy.

In recent years, households at the middle of the income distribution have faced a number of challenges. That raises the question of whether middle-class living standards are within reach for middle-income Americans in today's economy.