1. Impairment of asset value: Most of the assets of middle-class families are liabilities, and they often bear a lot of mortgage and car loans. During the period of deflation, we can see that prices have shrunk, incomes have fallen and unemployment has risen sharply, but liabilities will not change.
2. Increased debt burden: In the deflationary cycle, the borrowing cost will rise, because the central bank usually lowers interest rates to stimulate the economy, which means that middle-class families need to pay higher interest to repay debts, such as mortgage, car loan and credit card debt.
3. Increased income pressure: In the deflationary cycle, economic activities will slow down, enterprises will reduce recruitment and raise salaries, and the income of the middle class may be affected. In addition, deflation may also lead to an increase in the unemployment rate, which will make the middle class face greater income pressure.