Back to the No Future: Wealth Bottoms Out to 1986 Levels for 90% of Americans

Via QZ.com


Just in case you need a reminder of how lopsided the economy has become, a new paper from economists at the London School of Economics and the University of California at Berkeley shows the bottom 90 percent of American families are no wealthier than they were in 1986

While the top 10 percent and, more notably, the top one percent have seen their share of wealth steadily grow, the vast majority of Americans are making due with less. Via QZ:

A working paper released this month by Gabriel Zucman and Emmanuel Saez (economists at the London School of Economics and the University of California, Berkeley, respectively) shows that growing income inequality is fueling a commensurate disparity in total wealth. The two economists used tax data to build the most complete picture to date of US wealth. Their findings are worrisome.

Today, the top 0.1 percent of Americans — about 160,000 families, with net assets greater than $20 million — own 22 percent of household wealth, while the share of wealth held by the bottom 90 percent of Americans is no different than during their grandparents’ time.

What does this look like at the household level? Perhaps the most striking chart produced by the economists’ efforts to measure U.S. wealth is the one above, which shows that after a long march upward, and then a steep decline, the “average real wealth of bottom 90 percent families is no higher in 2012 than in 1986.” Meanwhile, the top 1% of wealthy families has almost completely recovered from the ill effects of the financial crisis.

People in the bottom 90 percent were hit especially hard by the financial crisis because of this particular downturn’s major feature: a housing bust. For those outside the ranks of the richest Americans, a greater proportion of wealth tends to come in the form of home equity. The wealthy, meanwhile, have a significant portion of their assets in securities, which has allowed them to benefit disproportionately from the recent bull market.

As if the proof wasn’t on front pages and front lawns from Modesto to Manhattan, these new statistics present a striking picture of a nation that is stagnant for the masses. Midterm elections are often framed as a referendum on the economy and the incumbents, which may be why Senate Democrats appear entirely doomed despite the root of the stagnation running much deeper than a few years of policy.

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