You have likely read many headlines about an improving U.S. economy. A case could be made by cherry picking the right economic readings. And the economy is improving for some industries and locations, but there is no denying some troubling statistics.

Incomes Down, Debts Up

When you have an economy where wages are declining and debts are rising, you have a Federal Reserve juggling a ticking time bomb. You might point out that several states have hiked the minimum wage. That’s good news for some people, but not the majority. Corporations will make up for the cost increases by slashing headcount. This means that more people will be without a job. This is certainly true for the majority of public companies which want to deliver on the bottom line for their shareholders. (For more, see: Tax Receipts Indicate the U.S. Economy is Still OK.)

You can look at many different readings for wages, but if you look at the big picture, you will notice a trend. According to Mauldin Economics, in 1971 the middle class made up 61% of the population. In 2015, the middle class made up 50%. And while the upper class has grown from 14% to 21%, the lower class has grown from 25% to 29%. Therefore, the only people benefiting from today’s economy is the upper class. This shouldn’t come as a surprise considering Federal Reserve policy, which lifts assets prices and allows corporations to take advantage of low interest policies to return capital to shareholders as opposed to adding jobs and growing organically. Currently, 50 million Americans live in poverty which is the highest number ever recorded.

This shift in class is beginning to catch up to consumer spending. According to the Commerce Department, retail sales declined 0.3% in March versus a consensus expectation of plus 0.1%. Autos and retail were hit the hardest, with auto spending down 2.1%. It should also be noted that outstanding auto loans are now above $1 trillion.

Perhaps the U.S. economy is improving in some industries and locations, but when the middle class is shrinking and the lower class is becoming larger it doesn’t lead to broad based confidence. (For more, see: The 5 Industries Driving the U.S Economy.)