The ranks of lower and middle class households in the United States is thinning. The reason why is remarkable: more households are earning higher incomes, allowing them to move up into the top ranks of the nation's income spectrum.

You don't have to take our word for it. We've organized the U.S. Census Bureau's inflation adjusted data for household income from 1967 through 2024 into three groups. The first group contains households with annual total money income of $49,999 or less, which represents lower income-earning households. The second group contains households earning between $50,000 and $149,999 to represent middle income-earning households. The third group contains all households earning $150,000 or more.

The following chart confirms the percentage share of lower and middle-class households in the U.S. is shrinking as the percentage of upper-class households increases.

U.S. households earning $150,000 or more in inflation-adjusted constant 2024 U.S. dollars have risen from 4.6% of all households to 26.1% from 1967 through 2024. Middle-ranked households earning between $50,000 and $149,999 has fallen from 52.4% to 43.8% of all U.S. households. The lowest-ranked households earning real incomes of $49,999 or less has plunged from accounting for 43.0% of all U.S. households to just 30.2%.

A similar pattern holds for U.S. families. See more commentary on this phenomenon here and here.

Reference

U.S. Census Bureau. Historical Income Tables: Households. Table H-17. Households by Total Money Income, Race, and Hispanic Origin of Householder. [Excel spreadsheet]. 25 August 2025.

When we reviewed the carnage among Business Development Companies, or BDCs, when recapping February 2026's dividend decreases, its concentration within this sub-sector of the financial services sector of the U.S. economy really stood out.

BDCs make their money by loaning money they either raise from investors or borrow themselves to small- and medium-sized enterprises that can't raise money by going public and selling stock and also financially distressed businesses. The business models of most established BDCs involve borrowing money, then loaning it back out at higher interest rates, where they pocket the difference.

That makes the profit margins of BDCs vulnerable to rate cuts. Because their loans are tied to the Federal Funds Rate, when the Fed cuts that rate, it negatively impacts BDC profits. In the last three years, BDCs have gone from a rising or high interest rate environment (March 2023 through August 2025), to a falling rate environment (September 2024 through December 2025).

The performance of the VanEck BDC Income Exchange Traded Fund (ETF: BIZD), which includes over 30 BDCs in its market-cap weighted index, gives a good sense of how BDCs performed in these different environments. The following chart shows BDCs rising or flat in the rising rate environment, but then either stalling or falling as the Fed shifted gears into its rate cutting mode.

But that's not the whole story. During the rate cutting period, which initiated the pressure on BDC profits, BDCs have had to cope with the DeepSeek AI shock, peaking just ahead of that event on 19 February 2025. Then they faced the Liberation Day global tariffs shock event of 2 April 2025, plunging with the rest of the market, before going on to recover. That lasted until August 2025, when the return of rate cuts initiated a new downtrend that was followed in January 2026 with a new AI shock event that undermined the business prospects of the Software-As-A-Service (SaaS) firms. Many of which were getting their funding to grow from BDCs.

With AI technologies seemingly set to destroy any potential profitability these firms had, many BDCs were suddenly faced with having to write down large portions of their portfolios. But, not all BDCs are in that boat.

When we looked at the stock performance of individual BDCs, we found a clear characteristic that divided them. That characteristic is their governance and what quickly became evident was that internally-managed BDCs were generally outperforming BDCs whose investments are managed by external parties.

To illustrate that difference, we randomly selected six externally-managed BDCs to compare their performance against an equal number of internally-managed BDCs over the last three years. Here is a list of the BDCs in our performance sample:

Let's get to the results. The following chart visualizes the relative performance of the stocks of the two kinds of BDCs:

We've shown the 3-year returns for the benchmarks of the S&P 500 (Index: SPX) at 72.01% and BIZD at -10.79% to show how they compare against the range of the two categories. The externally managed BDCs range from a high of +2.79% to a low of -29.22%, with four of the six BDCs having a negative return.

By contrast, the internally managed BDCs range from a high of +44.22% to a low of -16.96%, with two of the six BDCs having a negative return.

But it's not just recent market events driving that outcome. In the next two charts, we show how the sample of internally managed and externally managed BDCs compare with the performance of the S&P 500 over the last three years. The first chart tracks the internally managed BDCs:

The next chart follows the externally managed BDCs over the same period.

We find the internally-managed BDCs have sustained better performance than the externally-managed BDCs over all portions of this three year period, which can be seen in their relative performance being closer to that of the benchmark S&P 500 index. That better performance occurred both in a period in which rising interest rates provided BDCs with a tailwind and the current period in which falling interest rates are providing fierce headwinds against the BDCs.

When we started this exercise, we thought we'd mainly be discussing the role of how changing interest rates have affected the performance of the BDC sub-sector of the financial services industry, leading so many of these firms to cut their dividends in recent months. We didn't expect to run into a more interesting question: how much does management matter in a publicly traded company? In the case of BDCs, whether the people managing their lending business work directly for the firm or are employed outside of it would appear to have a significant impact affecting the returns of the shareholders who own the companies.

Image credit: Microsoft Copilot Designer. Prompt: "A cartoon illustrating a Business Development Company that is internally managed versus a BDC that is externally managed", the result of would appear to succinctly explain at least one reason why the outperformance of internally-managed BDCs over externally-managed ones exists!

We've had to shelve our popular "Dividends by the Numbers" series after the January 2026 edition. The series tracked the U.S. stock market's dividend metadata, which provided a simple, near real-time method of measuring the relative health of the U.S. economy.

Our analytical series was enabled by S&P Dow Jones Indices' Howard Silverblatt, who made the number and kinds of dividend actions announced for ordinary stocks traded in the U.S. stock market available each month. At this writing, it's possible S&P Dow Jones Indices will continue providing the stock market's dividend statistics on a quarterly basis, which had been the firm's practice, but they haven't yet indicated if they will.

We do however have other sources of dividend metadata to tap, which has at least two disadvantages. The biggest disadvantage is we have to generate a methodology for identifying dividend changes that may not align with the practices that S&P Dow Jones Indices, or its predecessor firms, Standard & Poor and, if we go back to the beginning, Standard Statistics, followed in compiling the data.

Another disadvantage is the scope of the alternate sources we're utilizing, which we've encountered as we simply sought to compile a list of what publicly-traded companies in the U.S. stock market declared they would decrease their dividends in February 2026. None of the sources we used to generate the list we're presenting offered a complete listing of the common stocks that decreased their dividends.

Because there isn't a single source that provides all dividend decrease data for the U.S. stock market for February 2026, we have to proceed with the assumption that the data we have represents a sample of the total.

We've opted to focus on dividend decreases because that data can provide a raw indication of which companies and industries may be experiencing some kind of distress. That distress may be significant in the case of firms that normally pay fixed dividends, which requires action on the part of their boards of directors to change their dividend payouts. Or, in the case of firms that pay variable dividends, like oil and gas royalty trusts, the number of dividend decreases that are announced can simply be an indication of whether oil prices were down in the preceding month. For variable dividend payers in the oil & gas sector, we consider any number above ten in a single month as indicating the industry is experiencing potentially contractionary headwinds.

Having now set these basic guidelines for evaluating the data, the following chart visualizes what we found for our February 2026 sampling of 26 dividend decreases:

Here's the list of sampled dividend decreases for February 2026:

• BCB Bancorp (NASDAQ: BCBP)
• CVR Partners (NYSE: UAN)
• Permianville Royalty Trust (NYSE: PVL)
• Golub Capital BDC (NASDAQ: GBDC)
• Natural Health Trends (NASDAQ: NHTC)
• Chesapeake Granite Wash Trust (NYSE: CHKR)
• LyondellBasell Industries (NYSE: LYB)
• AngloGold Ashanti (NYSE: AU)
• Sabine Royalty Trust (NYSE: SBR)
• Manhattan Bridge Capital (REIT-Mortgage) (NASDAQ: LOAN)
• Insteel Industries (NASDAQ: IIIN)
• Rayonier (REIT-Materials) (NYSE: RYN)
• TPG Specialty Lending (NYSE: TSLX)
• OFS Credit (NASDAQ: OCCI)
• Franklin BSP Realty Trust (REIT-Mortgage) (NYSE: FBRT)
• Permian Basin Royalty Trust (NYSE: PBT)
• Gerdau S.A. (NYSE: GGB)
• PermRock Royalty Trust (NYSE: PRT)
• MidCap Financial Investment (NASDAQ: MFIC)
• Vitesse Energy (NYSE: VTS)
• Morgan Stanley Direct Lending (NYSE: MSDL)
• Eagle Point Credit (NYSE: ECC)
• Nuveen Churchill Direct Lending (NYSE: NCDL)
• TXO Energy Partners (NYSE: TXO)
• Mesa Royalty Trust (NYSE: MTR)
• Horizon Tech Finance (NYSE: HRZN)
• BlackRock TCP (NASDAQ: TCPC)

Starting with the oil & gas industry, we count eight royalty trusts that pay variable distributions announcing decreased dividend payments to their shareholders, which falls below the threshold of ten we've established for indicating anything other than month-to-month noise for the sector. This makes sense because oil prices had been falling in January 2026. It's won't be until March 2026 that the U.S. military action against Iran that has prompted an increase in oil prices will reverse that trend, which bodes well for these firms in April. At this writing, the expectations are this spike will be comparatively short lived, which is why the stock prices of major oil firms haven't boomed in response.

The most notable dividend decreases announced in February 2026 are the eight reductions among firms in the financial service sector. These are primarily made up of Business Development Companies, or BDCs, which provide loans to medium-to-small businesses. These firms have been hit by a combination of falling interest rates, which puts pressure on their profitability margins, and the disruption of businesses to which they lend from artificial intelligence technologies. In recent months, the outlook of firms in the Software as a Service (SAAS) sub-sector of the information technology sector have been absolutely hammered by the increasing capabilities of AI.

Closing out the list, four firms in the Materials industry (steel foundries, gold miners, and timber) announced dividend decreases. There two each in the chemical and real estate sectors, and one each in the banking and consumer goods industrial categories.

On the whole, with less than 10 firms in oil and gas sector and fewer than 50 overall, the total number of dividend decreases in our February 2026 sample falls below the threshold that signals recessionary conditions are present within the U.S. economy.

Image credit: Dividends definition. State Savings and Loan Association advertisement on Page 9 of Beatrice, Nebraska's Beatrice Daily Express, 12 December 1921. Chronicling America. [Online Database]. 12 December 1921. Public domain image.

The outlook for the S&P 500's dividends dimmed since previous snapshot of their future. For all five quarters in our forecast window, all showed decreases though of varying amounts.

Here is our summary of how the outlook for the S&P 500's quarterly dividends per share has changed in the past month for the current quarter of 2026-Q1, the remaining three quarters of 2026, and the first quarter of 2027:

• 2026-Q1: Decrease of $0.25, falling to $21.46 per share
• 2026-Q2: Decrease of $0.08, dipping to $19.62 per share
• 2026-Q3: Decrease of $0.05, ticking down to $20.28 per share
• 2026-Q4: Decrease of $0.30, dropping to $20.12 per share
• 2027-Q1: Decrease of $0.40, declining to $21.20 per share

The following chart shows how expectations for the S&P 500's quarterly dividends per share changed in the month from 13 February 2026 to 13 March 2026.

In the next edition of this series, we'll show 2026-Q1 as finalized and will add 2027-Q2 to the outlook. If the outlook for dividends continues to dim, we'll have to drag out our old thesaurus to find new expressions to describe the negative changes since we blew through all the ones we keep on ready standby for this edition.

More About Dividend Futures Data

For this series, we take a snapshot of the CME Group's S&P 500 quarterly dividend futures data shortly after the second or third week of each month.

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. For example, as determined by dividend futures contracts, the now "current" quarter of 2026-Q1 began on Saturday, 20 December 2025 and will end later this week, on Friday, 20 March 2026. The upcoming quarter of 2026-Q2 will become the current quarter on Saturday, 21 March 2026 and end on Friday, 19 June 2026.

Because dividend futures are tied to options contracts that run on this schedule, that makes these figures different from the quarterly dividends per share figures that are reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

How changes in the outlook for dividends at specific points of time in the future contribute to changes in current day stock prices is described by this math.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.

The S&P 500 (Index: SPX) dropped another 1.6% during the second trading week of March 2026, closing at 6,632.19 on Friday, 13 March 2026. The index is five percent below its 27 January 2026 record high of 6,978.59.

Stock prices continued falling during this week as oil prices surged over $100 per barrel because of the Islamic Republic of Iran's efforts to close the Hormuz Strait in response to U.S. and Israeli military action against its government.

The surge in oil prices has raised the spectre of higher inflation, which in turn has made more Federal Reserve rate cuts, which had been widely expected, much less likely. The CME Group's FedWatch Tool projects the Fed will delay an expected quarter point reduction in the Federal Funds Rate steady until 16 September (2026-Q3), twelve weeks later than what was anticipated a week earlier. The tool does not anticipate any other interest rate changes in 2026.

The latest update of the alternative futures chart shows the trajectory of the S&P 500 following along near the bottom of the redzone forecast range during most of the week and dropping slightly below it on Thursday and Friday.

For analytical purposes, we can use the middle of the redzone forecast range to reasonably represent what path the S&P 500 would have taken if not for the impact of the Iran war. At this writing, the index would be around four percent higher than it is two weeks after the beginning of the geopolitical event.

Speaking of which, you can see some of the ebb and flow of it in the market-moving headlines of the week that was.

Monday, 9 March 2026

• Signs and portents for the U.S. economy:
• Oil’s wild ride: Crude drops 10% after 30% surge as Trump signals conflict may end
• Oil jumps to 2022 high on Iran war, falls after close as Russia sanctions in doubt
• Oil output, exports knocked by Iran conflict as prices surge
• Fed minions may be thinking about hiking U.S. interest rates because of oil price shock:
• Iran war fuels central bank rate hike bets on inflation fears
• Iran conflict forces Asian central banks into sharp policy rethink
• Bigger trouble, stimulus developing in China:
• China makes biggest retail fuel price cap increase in four years amid Iran war
• China consumer inflation hits three-year high on holiday surge
• BOJ minions get wage hike inflation they've tried to create, will use to justify more rate hikes:
• Japan real wages grow for first time in 13 months, boosting BOJ hike case
• Bigger trouble developing in Eurozone:
• Europe's struggling retail sector looks ill-prepared for new energy price shock
• Wall St ends higher as hopes of Iran war resolution offset inflation fears
• Shares skid as oil surge threatens inflation shock
• Oil soars 25%, gold drops as Iran war jolts global commodity markets
• Iran war boosts oil price, but oil major shares are stuck on the sidelines

Tuesday, 10 March 2026

• Signs and portents for the U.S. economy:
• Oil prices dive as Trump says Iran war will end ‘very soon’
• US existing home sales unexpectedly increase as mortgage rates decline
• Bigger trouble, stimulus developing in China:
• China pins hopes on society-wide AI push to add jobs, rejuvenate economy
• China’s exports turbocharge into 2026 after record-breaking year
• BOJ minions getting direction from Japan's new prime minister:
• Japan's Takaichi faces fresh scrutiny over BOJ policy stance
• Japan considering steps to cushion economy from Iran conflict, PM Takaichi says
• Bigger trouble developing in Eurozone, ECB minions planning to keep standing by:
• German exports record sharpest decline since May 2024
• ECB in no rush even if Iran war could alter outlook: policymakers
• Wall Street finished little changed as oil dropped and Middle East tensions stay in focus
• Wall St closes mixed on ramped-up Middle East tensions

Wednesday, 11 March 2026

• Signs and portents for the U.S. economy:
• Oil prices fall as WSJ says IEA proposes largest oil stock release ever
• US to release 172 million barrels of oil from strategic petroleum reserve
• US gasoline prices surpass $3.50 a gallon at the pumps as Iran war rages on
• Headline CPI holds at +2.4% Y/Y in February, as expected, still above Fed target
• US consumer prices rose 0.3% in February as cost of gasoline increased
• US Core CPI Tumbles To Slowest In 4 Years (Before Iran-Triggered Oil Spike)
• Campbell's cuts annual forecasts as demand for pretzels, chips softens
• Bigger trouble, stimulus developing in China:
• China's February auto sales slide due to holidays; Iran war casts pall over exports
• China lifts military budget to modernize weapons, defence technology
• BOJ minions see cooling inflation, will hike Japan's interest rates no matter what:
• Japan's wholesale inflation cools, but oil shock from Iran war threatens rebound
• BOJ to raise interest rates next quarter with expectations unchanged by Middle East war
• ECB minions thinking about maybe hiking Eurozone interest rates if inflation shows up:
• ECB policymakers acknowledge war risk, promise to keep inflation in check
• Exclusive: ECB will react if Iran war pushes up inflation, Nagel says
• Nasdaq inches up, Dow slides as oil prices rise again, retail inflation comes in-line
• S&P 500, Dow end lower as escalating Iran war sours risk appetite

Thursday, 12 March 2026

• Signs and portents for the U.S. economy:
• World faces largest-ever oil supply disruption on Middle East war, IEA says
• Oil jumps 5% as Iran escalates attacks on Gulf shipping
• Brent oil closes at $100 after Iran’s new supreme leader says Strait of Hormuz must remain closed
• US launches unfair-trade probes to rebuild Trump's tariff pressure
• US trade deficit narrows in January as exports jump to record high
• Fed minions still expected to cut U.S. interest rates in June 2026, thinking about making bank capital requirements less restrictive:
• Fed to cut rates in June, economists still say, despite war inflation risks
• Wall Street brokerages expect Fed rate cuts in mid 2026; Goldman shifts to September
• US Fed's Bowman unveils relaxed bank capital rules
• BOJ minions getting excited to hike Japan's interest rates again:
• Iran war may embolden BOJ's hawkish push, despite growth risks
• ECB minions say they can manage surge in oil prices better than they did four years ago:
• Iran oil shock prompts ECB hawks to seek 2021/22 rematch
• ECB's Schnabel warns of scars from post-pandemic inflation spike
• EU urges US to view it as ally in tackling overcapacity, not source of problem
• U.S. stocks sink as war against Iran intensifies, Brent settles above $100/bbl
• Wall St ends sharply lower as intensifying Iran war, soaring crude prompt selloff

Friday, 13 March 2026

• Signs and portents for the U.S. economy:
• US fourth-quarter GDP growth revised down to 0.7%
• VIEW PCE inflation report meets expectations, GDP is soft; markets rally
• Recession odds climb as Middle East conflict escalates, according to prediction markets
• US opens new unfair trade practices probes of 60 countries over forced labor
• Trump orders agencies to cut red tape on homebuilding, mortgages
• Fed minions expected to push off next rate cuts:
• Traders bet on Fed rate cut by September
• Bigger trouble, less stimulus developing in China:
• Chinese new loans slump more than expected as weak demand persists
• China February new loans drop to 900 billion yuan, miss forecasts
• China to tighten oversight of local government subsidies
• Bigger trouble developing in Eurozone, ECB minions expected to leave Eurozone interest rates alone:
• Euro zone industry takes a hit even before high energy costs bite
• Inflation threats heat up but ECB to keep rates on ice this year, say economists
• Wall Street ended lower as investors assessed PCE inflation and GDP data
• Wall Street closes lower, posts weekly loss as war on Iran fuels inflation worries

The Atlanta Fed's GDPNow tool forecast of real GDP growth in 2026-Q1 jumped to +2.7%, rebounding from the +2.1% growth anticipated a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a suit-wearing Wall Street bull and bear who react to a news ticker that says 'IRAN WAR' and 'OIL PRICE SPIKE' and 'RATE CUTS DELAYED' by screaming".