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Times are Suddenly Tough for Many Americans

In a recent Washington Post column, economist Robert Frank asked a provocative question:

"Why is it that in the 1960s, when only one parent worked outside the home in the typical American household, most middle-class families could meet their financial obligations? And why now, when two-income households are the norm, are many families struggling to pay their bills?"

According to the government's own inflation calculator, a modest $15,000 income in 1965 had the same buying power as $101,000 today. A lot of two-income American families are pulling down a $100,000 these days.

Yet by all accounts they are working longer and longer hours and are plagued with worry. Many who cannot keep up mortgage payments are losing their homes to foreclosure. What's different now from 1965?

Robert Frank blames something called housing creep. Over the decades, millions of Americans fled the cities for the suburbs – not just to escape racial unrest, but also in search of better schools. To get their kids into these schools, Frank argues, many families had to somehow afford bigger homes in better neighborhoods. Lenders were all too happy to help by dangling cheap and ready credit.

Even more fast and loose credit stoked Americans' appetite for computers, travel, fine food, and consumer comforts. If it took two jobs to afford the suburban good life, so be it.

But now, quite suddenly, home-loan and other credit rates are skyrocketing, and the costs of food, gasoline and health care are spiking beyond normal adjustments for inflation. The result is that two incomes are not always enough to cover the bills. More than housing creep is dampening the American dream of material comfort and security.