A lot of the United States still is massively in debt, especially in the lower rungs of the income ladder. Wealthy families have been able to pay off a lot of their debt in recent years, but poorer families have not.
The situation is so bad that Morgan Stanley says the middle class is "eroding." Too many people have high debt burdens, and wages aren't growing for those at the bottom, making it hard to pay off debt.
Inequality has become a big issue on the presidential campaign trail. But Morgan Stanley also sees it playing out in the business world. The middle-income consumer is disappearing. Retailers must respond by catering to the high and low end.
In Europe, the amount of debt people have increases as their income rises. The poor don't carry a huge debt load, the researchers found.
It's the exact opposite in the U.S. The lower-middle class and poor came into the Great Recession with a lot of debt and haven't been able to pay it down since.
About one in five American families who make $41,200 or less has what's considered a hefty debt burden -- defined as more than 40% debt-to-income load.
Since the recession, upper-income Americans have been saving more and paying down their debt. Upper middle class and wealthy households have basically cut their debt in half. That's why U.S. household debt overall has been on the decline in recent years.
As the Federal Reserve noted in its latest survey of consumer finances: "Families at the bottom of the income distribution saw continued substantial declines in average real incomes between 2010 and 2013, continuing the trend observed between the 2007 and 2010 surveys."
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