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Middle-class families are "drowning in debt" because of the increasing
costs of housing, education, and cars, according a new report by the
Center for American Progress. The progressive think tank blames stagnant
wages from 2001 to 2004 and the rising cost of big-ticket items, not
frivolous consumption, for heavy debt burdens. Mortgage debt has
increased by 29.5% for middle-class households, and education debt
jumped 37.1% during the three-year period. "Families between 35 and 44
years of age saw their debt payments relative to income rise by 34.9%,"
says the report by CAP senior economist Christian Weller. Overall,
middle-class families have seen their debt payments increase from 18% of
total income to 20%. The rising level of debt means families are saving
less, the CAP economist pointed out. "It ultimately exposes families to
more risk," Mr. Weller said. "They are closer to the precipice if
anything goes wrong." The CAP report is based on the latest Federal
Reserve Board survey of consumer finances.