The way I read it this is what happened to the economy over the last 46 years, 1970-to the present:
The pent-up demand for housing, education, and jobs, largely unsatisfied since 1930, was resolved during a long post-WWII boom of prosperity and an increasing consumption of goods and services. Working class and middle class expectations were re-calibrated upwards. Economic expansion can not continue indefinitely. At some point during the 1970s, the economic tide shifted from an increase to a gradual decrease of upward mobility.
Aspirations, however, did not contract. As purchasing power fell, women who had not previously needed to contribute to family income, found it necessary to join the workforce. It wasn't that women were going back to work to buy scarce food. They joined the workforce to maintain upward mobility.
Over time it became increasingly difficult for families to maintain upward mobility even with second incomes. Changes in the economy began to cut away the ground under many working class households, and later middle class households too, and increasing debt or borrowing against assets was required to keep the hope of continuous improvement afloat. More and more people have since experienced downward mobility.
It is true that if consumption remained constant (no new house, no transfusion of new furnishings, no new huge flat screen TV, no boat, no second and third car, no big trips, no private school for the kids) households would have done better in the short run. They would have accumulated financial rewards. In the longer run (but not very long) this prudent thrift would backfire: The US economy is 70% (+/-) driven by consumption. If consumption stays flat, the economy goes into reverse.
Under no circumstances can we have everything: full employment, high consumption, no inflation, abundant savings, low taxes, economic growth, etc. That's just not the way economies work--especially when we engage in massive and wasteful government expenditures (like pointless ill-conceived wars) and massive diversion of wealth into the hands of very few people.
The economy of the US is partly driven by the needs of the many, and largely driven by the needs and wishes of the few. Besides us, there are almost 7 billion other people on earth trying to aspire to a higher quality life, and besides our wealthiest, the world has a larger super wealthy class that soaks up a lot of cash and directs economy policy this way and that, according to their wants and needs.