If you read the headlines, it’s easy to be discouraged about the American economy. If you follow the trend lines, it’s difficult not to be more optimistic.

On Friday, the Bureau of Labor Statistics reported that the Consumer Price Index was 3.3 percent in March. That was a 0.9 percentage point increase over the 2.4 percent inflation rate in February. The cause is obvious.

The war with Iran may result in a significant foreign policy victory. Devastating Iran’s nuclear capabilities is essential, as is maintaining the Strait of Hormuz as a functional international waterway. But there has been a domestic cost to the conflict. Gasoline prices have soared as Iran’s regime seeks to survive by creating economic pain in the United States and the West. The country’s shadow leaders hope this will cause Trump to back off with the midterm elections looming. But underestimating U.S. resolve doesn’t appear to be a winning strategy.

Talk of a languishing economy and “affordability” have rekindled concerns that America’s middle class now struggles to survive and get ahead. Politicians from both parties regularly bemoan America’s “shrinking” middle class. That’s true in a sense, but it leaves a misleading impression.

This year, the American Enterprise Institute published a study on the upper-middle class. The review highlighted an interesting yet consistently overlooked reality: The middle class has shrunk because people are getting richer, not poorer.

“The upper-middle class boomed from 10 percent of families in 1979 to 31 percent in 2024, and its share of income doubled,” study authors Stephen Rose and Scott Winship found. “The share of families whose income left them short of the core middle class fell from 54 percent to 35 percent.”

This is exceedingly positive news about American social mobility. And there’s more good news.

“Median hourly wages among men age 25–54 were up 6–25 percent between 1979 and 2023, and median annual earnings of men who worked year-round were up 13–33 percent,” the study found.

These facts fly in the face of the class warfare arguments put forward by prominent progressives. Sen. Bernie Sanders built his political brand by attacking the wealthy. Blue states are seeking new ways to tax the well-off. It is true that those at the top of the income scale have also done very well over the past four decades. But their gains didn’t prevent others from moving up.

This is because the market economies don’t redistribute existing wealth; they create more for everyone. That doesn’t mean there won’t be challenges to overcome — both as a nation and for individuals. But if America maintains her free market principles, ever more people will join the upper-middle class in the decades to come.

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