ACLI's gauge of US middle-class resilience halves to 10 in a single quarter

A reading of 10 needs its scale ^[1]. The American Council of Life Insurers builds the index from 26 variables and says it generally runs between minus 100 and 100, with anything above zero meaning more resilience than the historical average ^[2]. By that measure, middle-class households are still slightly better placed than usual to cover an unexpected bill, keep their standard of living and save for retirement ^[3]. What halved between the first and second quarters, from 20 to 10 ^[17], was the cushion, or rather its lead over an average year, since zero on this scale is the historical norm ^[2]. The index now sits at least 20 points below where it stood in the first quarter of 2024 ^[18].

The group blamed slowing wage growth and persistent inflation ^[7], and it named fuel. The ACLI said higher energy prices in the second quarter put acute cost pressure on middle-class households, and that rising gas prices pushed the index's essentials score further into negative territory ^[8]. August data suggest the pressure lasted past the end of the quarter ^[9]. Consumer prices rose 3.4% from a year earlier. The gasoline index rose 3.9% from July alone, more than a third of the month's increase, according to the Bureau of Labor Statistics ^[9]. The share of surveyed households worried about transportation is up about 38% in a year ^[19].

The case that a house no longer defines the middle class rests mostly on what households say they want. In the ACLI's May survey, retirement savings beat homeownership about three to one as the marker of success ^[20]. That is a ranking of goals. The figures reported do not split the index between owners and renters, so they cannot show whether owners are better cushioned. The index and both surveys come from a single trade group for life insurers ^[1][11][12]. Its April survey found 46% of middle-class Americans lacked confidence in their retirement savings ^[12].

An outside figure is blunter. A 2025 Brookings Institution analysis, cited by Kiplinger, found that a third of the middle class, defined as the middle 60% of earners, cannot afford the cost of living where they live ^[13]. It works out to about one in five of all earners ^[21]. "It takes higher and higher incomes to achieve that quality of life," Kiplinger wrote ^[14]. Korea has the same squeeze. Gasoline there has stayed above 1,800 won a liter and five-year hybrid mortgage rates at the big banks top out near 7% ^[15], while an NH Investment & Securities analysis still counts 52.9% of households as middle class by the OECD income standard ^[16].

The 2022 episode is the case for a rebound. After its low, the index climbed at least 77 points in six quarters ^[22], and cheaper gas could lift the essentials score the same way. Against that, wage growth is slowing ^[7]. Freddie Mac also reported the average 30-year fixed mortgage rate crossing 7% last month, a level it had not reached since January of last year ^[10]. That puts a higher borrowing cost on top of the fuel cost the ACLI already blamed.

I'd expect the third-quarter reading to fall again, because the August gasoline numbers show the energy pressure behind the second-quarter drop still building after the quarter closed ^[9]. The view is wrong if the third-quarter reading comes back to 20 or better ^[17], or if the 46% of households worried about affording essentials ^[4] falls.