Report: Americans Are 'Drowning in Debt'.(middle class)

WASHINGTON -- America's middle class is drowning in debt," according to a new report from the Center for American Progress.

The "Drowning in Debt: America's Middle Class Falls Deeper in Debt as Income Growth Slows and Costs Climb" report found that between 2001 and 2004 debt for a middle-income family earning $45,000 increased by 33.1%, even after adjusting for inflation.

Debt relative to income rose even more, to 33.9%, during this period for middle-income families, according to the Federal Reserve.

Moreover, personal bankruptcies among these households also increased, due to slow income growth between 2001 and 2004, compared to the rising cost of the largest family expenses such as housing, education loans, medical expenses and transportation, family budgets have lower buying power.

"Greater debt levels are pushing families closer to the brink," said CAP senior economist and author of the report, Christian E. Weller. "If anything goes wrong, they fall faster through the cracks than in the past."

The report suggests that a common inaccurate assumption is that the growth in debt among middle-income families with incomes of $25,000 to $70,000 a year results from over-consumption, or credit card debt, while data show it is "primarily due to heavier borrowing for investments in homes or education, both of which saw ...