US Income Class Structure and Consumer Market Investment Insights

Based on the latest data and in-depth analysis, I will systematically explain the U.S. income class structure and its implications for consumer market investment.

From the perspective of official statistical standards, a

of $140,000 per year (approximately 1 million RMB) is in the following positions:

• Relative to median income
  : $140,000 is approximately
  1.75 times
  the U.S. household income median (about $80,000) [1]
• Income class distribution
  : At a higher position in the
  fourth 20% quantile
  (the average income of this quantile is $136,800) [1]
• Relative positioning
  : Exceeds approximately
  65%
  of U.S. households, belonging to the
  upper-middle income class

However, the assessment of real living costs reveals a more brutal reality:

[1]:

• Basic living cost for a family of four
  : Approximately
  $136,500/year
• Detailed breakdown
  :
  • Childcare cost: $32,773
  • Housing: $23,267
  • Food: $14,717
  • Transportation: $14,828
  • Health insurance: $10,567
  • Other necessities: $21,857
  • Taxes: $18,500

:

• An annual income of $140,000 is only
  slightly above
  the actual living cost threshold
• In high-cost cities (such as New York and San Francisco), this income may
  only be enough to maintain basic living
• This explains why high-income Chinese communities still feel great economic pressure

---

Threshold Type	Amount (Family of Four)	Household Share	Definition
Official Poverty Line	$31,200 (2024)	11%	Established in 1963, seriously out of touch with reality [1]
Middle-Class Threshold	$41,000-$124,000	45%	Pew Research Center 2025 standard [2]
Real Slaughter Line	$136,500	~60% below this line	Real living cost, i.e., “Death Valley” line [1]

[1]:

1. Welfare Cliff Effect
   : Immediately lose all government benefits after income exceeds the official poverty line
2. Income-Expense Scissors
   : Income is insufficient to cover rigid expenses such as childcare and housing
3. Fragile Balance
   : Any accident (illness, unemployment) can lead to bankruptcy

:

• 37%
  of Americans can’t even come up with $400 in emergency cash [2]
• 25%
  of households are “living paycheck to paycheck”, with income only enough to cover basic bills [2]
• Total homeless population surged by 18% in 2024
  , with young people under 25 accounting for 27% [2]

2025 Middle-Class Income Thresholds in Major Cities [3]:

• Arlington, Virginia
  : $93,470 - $280,438
• San Jose, California
  : $90,810 - $272,458
• San Francisco
  : $84,478 - $253,460
• Average
  : $49,478 - $148,449

---

[1]:

Income Quantile	Average Income	Income Share	Change vs. 1974
Bottom 20%	$18,460	3.1%	-1.2%
Second 20%	$49,380	8.2%	-2.4%
Middle 20%	$84,390	13.9%	-3.1%
Fourth 20%	$136,800	22.6%	-2.0%
Top 20%	$316,100	52.2%	+8.7%
Top5%	$560,000	23.1%	+6.6%

:

• The income share of the middle class has
  dropped from 17% in 1974 to 13.9%
• The top 20% of the population controls
  more than half
  of the national income
• Wealth growth mainly comes from
  corporate equity assets
  (up to $20 trillion between 2023-2025) [2]

(≈20% of population):

• Driven by asset appreciation (real estate, stocks)
• Luxury consumption boom
  : Private jets, high-end travel
• Service consumption upgrade (premium cabins, customized services) [4]

(≈80% of population):

• Stagnant wage income
• Significant consumption downgrade
  :
  • In 2025,
    28%
    of middle-income people switched to discount stores (only 20% in 2021) [4]
  • 2025 holiday shopping budget decreased by
    4.3%
    (inflation-adjusted) [4]
  • Walmart and Target have more aggressive discount strategies [5]

---

:

• Long-term consumption downgrade
  : 87% of people under economic pressure plan to shop at discount stores [4]
• Customer base expansion
  : From low-income groups to middle class
• Representative Enterprises
  :
  • TJX Companies (T.J. Maxx)
  • Ross Stores
  • Burlington Stores
  • Dollar General, Dollar Tree [4][5]

:

• Retail investment sales reached $59 billion in 2024,
  up 8% YoY
  [5]
• Q1 2025 investment transaction volume increased by
  11%
  compared to Q1 2024 [5]
• Discount chains have “good foot traffic”, and shoppers “leave with large shopping bags” [5]

:

• Accelerated wealth concentration
  : The top 10% of the population gains $12,000 annually [2]
• Asset appreciation-driven consumption
  : Wealth effect from rising real estate and stocks
• Service Upgrade Trend
  :
  • Delta Air Lines’ premium cabin sales growth outpaces economy class [4]
  • Growth in private services and customized demand

:

• Premium Retail
  : Luxury department stores (Saks Fifth Avenue, etc.)
• Experience Consumption
  : High-end travel, private clubs
• Health and Education
  : Private healthcare, elite education

:

• “Disappearing” middle class: Continued shrinkage of income share
• “Ghost Household” Phenomenon
  : People with insufficient income choose not to have children, leading to long-term demand shrinkage [1]
• Typical Victims
  :
  • Mid-tier department stores (e.g., bankrupt Bed Bath & Beyond) [6]
  • Traditional mid-priced brands
  • Non-essential consumer goods categories

:

• Childcare Services
  : Demand declines due to cost pressure
• Traditional Housing
  : High mortgage rates + high housing prices squeeze demand
• Unsubsidized Healthcare
  : Unaffordable for middle and low-income groups

:

• AI-driven dynamic pricing technology
• Supply chain optimization to reduce costs
• Private brand development

: 60% of consumer market companies plan to increase cloud investment to optimize pricing using generative AI [5]

:

• Subscription-based services (smooth expenses)
• Sharing economy (reduce ownership costs)
• Second-hand trading platforms (circular economy)

---

:

1. Defensive Position
   (40-50%): Discount retail leaders, essential consumer goods
2. Offensive Position
   (30-40%): Luxury goods, premium services, AI retail technology
3. Opportunistic Position
   (10-20%): Emerging consumption models, innovative cost-reduction solutions

:

• High-income Concentrated Areas
  : Bay Area (California), New York Metropolitan Area, Northeast Corridor
• Cost Lowlands
  : Texas, Florida (middle-class migration destinations)

:

• Rust Belt
  : Manufacturing hollowing out, declining income
• High-tax States
  : Risk of middle-class outmigration

:

• Discount retail performance continues to deliver
• Increased holiday discount intensity verifies consumption downgrade [5]

:

• Popularization of AI pricing technology leads to efficiency differentiation
• Luxury market may experience correction (over-concentration risk)

:

• Generational shift: Gen Z consumption habits reshape market structure [7]
• Demographic changes: Aging brings opportunities in healthcare + silver economy

---

1. Real Positioning of $140k
   : Statistically upper-middle income, but in terms of purchasing power, it is
   only at the edge of the actual living cost threshold
   , revealing the huge economic pressure behind the “American Dream”.
2. Three Meanings of the “Slaughter Line”
   :
   • The official poverty line ($31,200) has lost practical significance
   • The middle-class threshold ($41k-$124k) is still insufficient to maintain a decent life
   • The real slaughter line ($136,500)
     is the real dilemma facing most U.S. households
3. Investment Implications of K-shaped Differentiation
   :
   • Don’t invest in the “disappearing middle class”
     - This is the biggest trap
   • Polarization is a long-term trend
     - Discount and luxury goods each have opportunities
   • Technology enablers
     will win - AI optimizes costs and pricing
4. Ultimate Thought
   : The U.S. economy is undergoing
   structural reshaping
   , and the traditional middle-class consumption model is collapsing. Successful investment must recognize that:
   Not all consumption downgrades are cyclical; some are structural
   . Identifying which are temporary weaknesses and which are permanent transformations is the key to obtaining excess returns.

---

[1] Huxiu.com - “An Article Attacked by U.S. Media Calculates the Real Cost of Living in the U.S.” (https://www.huxiu.com/article/4821091.html)

[2] Yahoo Finance - “One Unemployment Spell and You’re Doomed! The Invisible Noose for U.S. Middle Class: The Slaughter Line” (https://hk.finance.yahoo.com/news/...09-0004942.html)

[3] SmartAsset - “What It Takes to Be Middle Class in America – 2025 Study” (https://smartasset.com/data-studies/middle-class-2025)

[4] JP China Press - “Financial Observation: Severe K-shaped Differentiation, How It Affects American Lives” (https://www.jpchinapress.com/...1438822170717356032.html)

[5] MMCG Investment - “Retail Investment Benchmarks 2025” (https://www.mmcginvest.com/post/retail-investment-benchmarks-2025)

[6] Savills - “Resilient Retail Makes a Strong Comeback” (https://impacts.savills.com/wp-content/uploads/64-69-retail.pdf)

[7] Sina Finance - “Behind the ‘Strong’ Growth of U.S. Holiday Consumption” (https://finance.sina.com.cn/.../doc-infzmaxc2603203.shtml)

[8] Visual Capitalist - “Charted: The Distribution of Household Income in America” (https://www.visualcapitalist.com/distribution-of-household-income-in-america/)