John W. Schoen Senior producer • Profile • E-mail

Is an extra couple of hundred dollars at the gas pump enough to break the budget of the average American? By itself, maybe not. But rising gas prices are just the latest in a series of blows that have consumers tightening their belts.

I have mortgage on my small home in Western Chicago and I'm sure it's going down in value, but it doesn't affect my bank account. … I still have my job (for now) and I still make the same salary (although I haven't had a raise in a couple of years). Are people walking the tight-rope of finances so closely that an extra $100 of gas each month and an additional $75 in groceries (due to inflation) is putting them that deep in a hole? That's only $2,100 per year. I can understand someone who is scraping by working at Wendy's feeling the pinch, but $2,100 a year?
— Russell S., Chicago, Ill.

It turns out there are a lot of Americans who are trying to make ends meet on a Wendy’s salary.

The average annual after-tax income for the middle quintile of wage earners (40 percent make less and 40 percent make more) was $43,799 in 2006 – the latest numbers available from the Bureau of Labor Statistics. Let’s see where it went:

The biggest single category is housing at $14,204; transportation ate up $7,662 and food accounted for another $5,614 in 2006. The Middle Quintile family’s budget also included $2,647 for medical care and $1,680 for clothing.

Gasoline accounted for $2,182 — or about $180 a month at 2006 prices. Since January, 2007, gas prices are up almost 90 percent. That’s means the Middle Quintiles are now paying $4,124 — an extra $1,942 a year.

The bigger problem is that the Middle Quintiles are looking at cost increases beyond the jump in gasoline prices. Higher prices for food, housing, clothing, medical care and other budget items have added another $1,600 to the stack of bills. So the Middle Quintiles have had to figure out how to come up more another $3,542 a year to keep the bill collectors at bay.

One solution would be to ask the boss for a raise, find a better-paying job or take a second (or third) job to make up the shortfall. But with the economy stuck in neutral — and maybe about to head in reverse — those options just aren’t available to many families. The result is that the average wage is up just 3.2 percent in the last 12 months.

That means the Middle Quintiles saw their paycheck grow by about $1,400 a year — or roughly $116 a month. Even if food and gasoline prices stopped rising today, the Middle Quintiles are still coming up short by $2,160 a year — or about $180 a month.

That may not sound like a lot to many Americans in the upper quintiles, but Mr. and Mrs. Middle Quintile have to make it up somehow. Tax rebate checks might have helped — if gasoline prices hadn’t begun surging in February before the ink was dry on the president’s signature passing the law. Even if gas prices remain where they are today, the rise in prices since February will have eaten up the entire $100 billion in rebates by the end of September.

That leaves the Middle Quintiles still looking for a way to come up with that extra $180 a month. The answer for many is to go deeper into debt. According to those 2006 spending numbers, the Middle Quintiles saw their assets increase by $10,288 – including gains on retirement savings and the value of their home. But their debt rose by $14,258. That meant they ended the year $3,970 further in the hole than they started. Today, with the stock market and house prices no longer lifting asset prices as rapidly as in 2006, the Middle Quintiles will likely see their debt balance continue to grow.

Even though there aren’t a lot of “extras” in the Middle Quintile’s family budget, at some point, their rising debt balance will force them find places to cut spending. The faster inflation rises, the sooner that will happen.

And when it does, the U.S. economy — which relies on the Middle Quintiles spending for 70 cents of every dollar of Gross Domestic Product — will also feel the squeeze.

MORE FROM TECHNOLOGY & MONEY

Technology & Money Section Front

3G network standards vary by carrier Hard-up consumers seek solace in gadgets 5 tips to forestall a foreclosure What a mess! 5 financial cleanup tips Heavy load? Best backpacks for kids Money 911: What’s your emergency? Pinching pennies like your grandparents Mattel awarded $100 million in Bratz lawsuit A good find: GPS to locate the kids Survive the drive! Great gear for kids Technology & Money Section Front   Add Technology & Money headlines to your news reader: