I feel like inflation has remained low because wages have barely budged despite employers constantly saying there's a labor shortage [1]. It's almost like we're in a weird place where only the upper end of the economy is overheating while the rest is oddly stagnant.

[1] http://www.businessinsider.com/fed-official-businesses-shoul...

It's the Japanese debt trap. It's causing our unusually restrained inflation levels for the exact same reason it did with Japan. Too much of our income is going to service debt. It locks down the money that would otherwise be available to spur inflation. Not only is the debt service cost a restraint, but the vast outstanding debt levels also cause conservative behavior in all sorts of ways (whether at the consumer level, or higher up the financial chain). The higher US debt levels go vs income, the more difficult it will become to spur inflation in traditional ways. Ultimately, direct currency debasement will be the sole remaining means, as with the Japanese and Yen.

Inflation doesn't include housing costs, right? So cost of living can go through the roof but as long as consumables are cheap, official measures of inflation won't notice.

It incorporates housing costs by measuring rental costs and imputing the rents of those who own housing:

http://www.slate.com/blogs/moneybox/2014/02/24/housing_infla...

For thirty years we've been incorporating low-skill Chinese labour into the global economy. That has depressed inflation for most manufactured things despite prolonged low interest rates. When slowing Chinese productivity growth is finally felt either inflation will normalize and the recession will hit. High debt rates, bad demographics in the west, and asset bubbles are going to make the next major recession especially hard. Especially if knowledge workers are able to emigrate out of their tax bases (either out of state or out of country).

>The upper-middle and upper classes are the only groups that invest in property and stocks at any non-negligible amount.

Not true. A lot of blue collar workers have 401k plans which invest actively in the stock market.

There are always exceptions to the norm, but that doesn't mean the norm doesn't exist: http://news.gallup.com/poll/190883/half-americans-own-stocks...