The proliferation of Starbucks and designer jeans is a red herring—today's middle class has less spending money than ever, says a Harvard law professor. People can buy more stuff because prices are down, but that provides a skewed picture. "These are things you don't see at the mall: housing, health care, child care, saving and saving for college," says Elizabeth Warren.
In fact, a greater percentage of middle-class income is going to essentials like food and housing than it did 40 years ago, MSNBC reports. So those who sniff that the middle class has its own frivolous spending to blame for financial circumstances are full of it, say economists. "They feel squeezed because they are squeezed," says Jared Bernstein.