Good news for the middle-class in America.
Statements like that should always be accompanied by a book-length compendium of caveats to account for the fact that the middle-class has all but disappeared in a lot of traditional respects, as evidenced by diminishing options for goods and services tailored to households making, say, 25% above the median national income, but no more.
To be honest, that assessment’s entirely anecdotal on my part, but I bet there is in fact evidence to back it up. I was in Savannah over the weekend staying at the Perry Lane (the decor’s fun), the sort of hotel which, 20 years ago, wouldn’t be the first choice (or even a feasible choice) for your typical family of three or four. Don’t get me wrong, it’s not the Aman, but it’s not really for the L.L. Bean crowd either, and yet I saw more Patagonia quarter zips, Land’s End oxfords and On sneakers in 48 hours than I’d seen in five years.
My supposition is that the wealth bifurcation in America and the hollowing out not just of the traditional middle-class but now even of the lower-end of the upper-middle-class, is mirrored by a decrease in the quality and quantity of goods and services on offer for families making less than, say, $300,000 a year.
As a result, semi-affluent people are being forced to commingle with the actually affluent. I do that myself, but I’m single and it’s a choice. I’m sure it’s not as fun when you’re providing for three or four other people and it feels obligatory because middle-of-the-road options are disappearing.
Anyway, if you ask Goldman — a firm which, as we all know, is staffed primarily by regular Americans just trying to make an honest living doing what Lloyd Blankfein famously described as “God’s work” — middle-income consumers are expected to do well in 2026.
Specifically, the bank’s economists “expect strong and accelerating real income growth” for those making between $70,000 and $95,000 in 2026. The figure on the right shows the projected distribution.
Apparently, the real middle-class (i.e., ~median annual income +/- $10,000) will experience the fastest inflation-adjusted income growth of any decile in the new year.
“Slow job growth and elevated inflation have weighed on consumer income growth in Q4, but a re-acceleration in early 2026” is likely “as a result of a diminishing inflation impulse from tariffs, tax cuts passed in the One Big Beautiful Bill Act, and a stabilization of the labor market,” Goldman’s Ben Snider, who stepped up to replace the retiring David Kostin, wrote (congrats Ben).
Note from the same right-most figure that there’s just one income cohort expected to do worse in 2026: Those making less than $50,000. For that group, real income growth will decelerate to just 1.1% “due to SNAP and Medicaid cuts.”
[For the super fans among you: Me and G — my right-hand from the Monthly Letters including “Doomscroll,” “Survival of the Richest” and “Lost at Sea” — toasting at The Grey, in Savannah last weekend, 18 years after the glory days of our Tennessee rackets.]
“The decor’s fun”
The artist who painted that mural is amazing. I’m assuming that’s original art and not just a repro of a Degas or something. I bet they’re available for hire if you wanted to suppor the arts/do something ridiculous. The Tweedle Dee & Dum statues are the perfect cherry on top.
Patagonia is its own category. A decade or two ago, it was the part of the Silicon Valley uniform, and to this day is used to virtue signal amongst the upper-middle and the lower-upper (I mean, that’s why I wear it). “Our only shareholder is Earth,” and whatnot. I can’t speak to what Land’s End or On sneakers signifies (I’m a Hoku man myself). My parents bought me a Land’s End parka in 1995 that I still wear today, so if the signal is “Very warm and very durable canvas,” then I’m onboard.
I did some internet sleuthing. It’s a Degas.
Yes. Our H seems to have a “thing” for ballerinas.
The original is in musée d’orsay
The middle class (from which I came) is virtually gutted. That isn’t even what young should be aspiring for. The distinction now should be the “investor class” vs. “work until you die class “.
You have a lot to toast to. Pretty amazing journey.
Just finished reading The Cruise of the Snark and John Barleycorn because Jack London is one of my favorite fiction writers and I wanted to get a better understanding of where he was coming from. Turns out it was even darker than I expected.
I’m still waiting for your autobiography. You better write it before it is too late.
You look taller than I expected.
You trying to hold my hand, Chuck? You sly dog.
H-Man, you have been, and are a connoisseur of the low country.
The more temporarily embarrassed millionaires the better. And I think there’s gonna be a lot more temporarily embarrassed millionaires in the future than there are now.
I’m sure there is a lot of work behind GS’ forecast, but without seeing it, the conclusion is non-intuitive for me.
I can see that certain occupations and locations are likely to have higher income growth and/or lower expense growth. Maybe when you roll that up, the result is that the $70-95K cohort happens to come out on top. But for any given household, the fact that they are in that cohort seems unlikely to be a significant factor in their 2026 fate.