Some Heat Taken off of the Middle Class: Costs are Starting to Rise More Slowly

I wonder if this is going to translate into more spending by the beleaguered middle class?

Still, for now, many families have a bit less to worry about. On a per-person basis, health spending rose just 3% in 2012. Spending on prescription drugs was a bright spot for consumers, rising by just 0.4% — mainly because several blockbuster drugs, including Lipitor, Plavix and Singulair, came off patent, opening the door for cheaper generics.

Those double digit hikes of the 2000s are slowly starting to abate. I wonder if this is a mix of people getting healthier and just not needing so much Liptor and Plavix to keep them from dying? Maybe people just aren't going to the doctor as much? This is kind of eye opening for those parents trying to send their kids to college.

As for the other fast-rising middle-class expense — higher ed — costs have only recently shown signs of flattening out. The cost of college tuition and fees, as measured by the government, rose about 17% per year from 2000 through 2012. In 2013, however, those costs rose by only about 4%. It’s not entirely clear why the slowdown happened and whether it’s likely to be temporary or permanent. But universities have come under considerable pressure lately as students have graduated with huge debt loads, only to find it difficult to find jobs that pay enough to finance their student-loan payments.

I think the slowdown happened because colleges have finally understood that they cannot raise tuition forever and hope parents and students keep going into deep debt to pay them. The millennials were sold a bill of goods by the colleges saying that if you borrow $30K a year for tuition you will find a good job. Turns out that it was marketing hype. I mean a good state school will give you the same chance of landing a job as a fancy private school that no one has ever heard of. Paying a pile of money for tuition does not make the college any better when it comes to finding work.