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Author
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Topic: Wealthiest Americans Only Winners in Recovery, Pew Says
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mockingbird
Knowflake Posts: 1550
From:
Registered: Dec 2011
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posted April 24, 2013 08:20 AM
  
The U.S. economy has recovered for households with net worth of $500,000 or more, a new study shows. The recession continues for almost everyone else.
Wealthy households boosted their net worth by 21.2 percent in the aftermath of the recession, according to the study released today by the Pew Research Center. The rest of America lost 4.9 percent of household wealth from 2009 to 2011.
Pew attributed the disparity to gains during that period in the stock and bond markets, benefiting affluent households, while the housing market’s decline hit others harder. The report underscores the nation’s growing income inequality, with the top 13 percent of households recovering their losses from the 18- month recession that ended in June 2009, and the rest of the country continuing to hemorrhage wealth.
“The results are entirely sensible, but depressing,” said Richard Fry, a Pew senior research associate and co-author of the study by the Washington-based organization. “It’s a stark story of two Americas.”
Average household net worth across all income levels increased 14 percent to $338,950 from 2009 to 2011, the latest figures available from the U.S. Census Bureau.
The Pew report, based on the Census Bureau’s Survey of Income and Program Participation, reinforces a body of evidence that the U.S. is becoming a nation of haves and have-nots.
Widening Gap
One of the most common measures of income inequality, the Gini coefficient, has risen in the last generation. The coefficient is a number between 0 and 1, with a zero indicating that all income is shared equally and a one representing complete concentration of income.
Income inequality in the U.S. grew to 0.477 in 2011, according to the Census Bureau, a 20.2 percent increase from the 0.397 measured in 1967.
The gap between rich and poor is most pronounced in the Bridgeport, Connecticut, metropolitan area, about an hour from Wall Street. The Gini of 0.535 measured there is approximately the same as the national rate for Thailand, surpassing the figures for Zimbabwe and Chile.
The U.S. Gini is equivalent to the figures for Ecuador, China and Madagascar.
The growing inequality during the past three decades is becoming a permanent fixture of the U.S. economy, according to a Brookings Institution study released last month and co-authored by Jason DeBacker, a Middle Tennessee State University economist.
‘Less Dynamic’
“From a number of different perspectives, there’s evidence that the U.S. economy has become a little less dynamic,” DeBacker said.
Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University, said the recession’s effects are still being felt because of the length and breadth of the downturn, the worst since the Great Depression.
Americans feel mired in a slump even though the Cambridge, Massachusetts-based National Bureau of Economic Research declared that the recession ended in June 2009, Van Horn said.
“From the standpoint of the typical American, the data used aren’t always very useful indicators,” he said.
The Pew report found that interest-earning assets such as U.S. government securities, municipal and corporate bonds boosted wealth among high-income Americans. The value of those assets, owned by 13 percent of U.S. households with net worth greater than $500,000, rose 389 percent during the two-year period to an average of $803,641.
“Very few households have those assets, but when they do -- wow!” Fry said. “The average values just skyrocketed.”
401(k) Plans
Tax-deferred 401(k) plans, owned by 65 percent of wealthy households, recorded the second-fastest growth rate of any asset class, climbing 57 percent to an average value of $119,799. Thirty-nine percent of U.S. households with net worth less than $500,000 reported owning 401(k) or thrift savings plans.
Real estate, which sparked a global financial crisis in 2008 when the housing bubble collapsed, remained a poor investment after the recession. The Pew study said average rental-property equity plunged to $370,013 in 2011, down 32 percent from the $547,462 registered in 2009. Home equity dropped 16 percent to an average of $127,290.
To contact the reporter on this story: Frank Bass in New York at fbass1@bloomberg.net
To contact the editor responsible for this story: Mark McQuillan in Washington at mmcquillan@bloomberg.net
http://mobile.bloomberg.com/news/2013-04-23/wealthiest-americans-only-winners-in-recovery-pew-says.html ------------------
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mockingbird
Knowflake Posts: 1550
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posted April 24, 2013 08:26 AM
This isn't about "jealousy" (as I've heard some say), but about concern regarding a system fostering greater inequality than is healthy.Increasing inequality fosters greater unrest, especially in a society without accepted, universal institutions explaining or reinforcing that inequality. (That is, great inequality has been historically sustainable only with an aristocracy/stratified and static class system and/or with religious institutions "explaining" it in terms acceptable to the masses.) ------------------
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mockingbird
Knowflake Posts: 1550
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posted April 24, 2013 08:31 AM
I'm about to get back to shoveling during a blizzard (cleaning with children), but if you're uncertain regarding the genesis of my concern, Google "gini index 'united states' ", "gini index historic", "gini index us '20th century'", or some variation.------------------
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AcousticGod
Knowflake Posts: 7287
From: Pleasanton, CA
Registered: Apr 2009
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posted April 24, 2013 11:46 AM
There was great income inequality in the time of the Great Depression as well. It seems to be a correlary to tough economic times. FDR went so far as to cap CEO pay in trying to correct the situation.IP: Logged |
katatonic
Knowflake Posts: 10056
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Registered: Apr 2009
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posted April 24, 2013 11:51 AM
Yes, the LAST THIRTY YEARS has been one humdinger of an experiment, for which those who have swallowed the "free market economy" meme now blame obama..the "enemy of small business"IP: Logged |
YoursTrulyAlways
Knowflake Posts: 5181
From:
Registered: Oct 2011
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posted April 24, 2013 03:55 PM
quote:
Originally posted by mockingbird:
The gap between rich and poor is most pronounced in the Bridgeport, Connecticut, metropolitan area, about an hour from Wall Street. The Gini of 0.535 measured there is approximately the same as the national rate for Thailand, surpassing the figures for Zimbabwe and Chile.
Yeah. Thanks a lot. Take the hedge fund capital of the world and measure between hedge fund managers (who don't earn a paycheck and pay 20% capital gains on their nine/ten figure incomes) and the working class. Incidently, I haven't been to Zimbabwe, but as far as I know, the poorest people of Thailand and Chile don't own the 42-55 inch LED HDTVs and satellite TV dishes and late model Japanese/American cars that the poorest people around Bridgeport, CT own. My Latin gardeners drive new pickup trucks that even the middle class in China struggle to own. Now that you are talking about my neighborhood, and specifically my net worth bracket, you have my attention. IP: Logged |
katatonic
Knowflake Posts: 10056
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Registered: Apr 2009
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posted April 24, 2013 04:18 PM
Ian a lot of americans fon't have those things either, nor do they have enough to SQUAT in the stock market "belt"...IP: Logged |
YoursTrulyAlways
Knowflake Posts: 5181
From:
Registered: Oct 2011
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posted April 24, 2013 04:28 PM
Most people ought to take advantage of their employer's 3% matching 401k plans. Assuming a middle class family with a joint income of $80K have net savings of 6%, plus 6% employer contributions, assuming 3% income growth annually, assuming 5% compunded IRR, that's $84,000 over one decade. Over three decades, we are talking about easily $400K. Taking real estate property appreciation of just 3% each year in the same house and same neighborhood, over three decades, that's more than a doubling in terms of capital appreciation. That's easily $600K of wealth there. The savings rate in the US is way too low. Now, the US is not Japan, but something needs to be done to spur household savings.IP: Logged |
SpooL
Knowflake Posts: 558
From: Toronto/Ottawa,Canada
Registered: Apr 2009
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posted April 24, 2013 04:50 PM
This is were it gets tricky,There is no doubt that in Zimbabwe, the income is lower but the same can be said for the cost of living, so the ratio is almost equilibrium. My problem is people should be better aware of price and cost fluctuations while looking down into the future and preparing. For example how many people purchased an LCD TV when they first came out? now you can find an LCD for < $200. If people could be a little bit more smart with there money, they will be slightly better off. Plus, people should have been aware that wages will never see any huge increases in N. America because N. America doesn't have the same advantages as in the emerging markets or tiger economies. I mean in the 80's the threat of competition from overseas was well aware and gradually, gradually we are at the point we are now. I assume people were suffering from the "boiling frog syndrome" right now the best thing households should be doing is cutting back there expenses dramatically. The problem is people are not willing to do the necessary sacrifices. IP: Logged |
katatonic
Knowflake Posts: 10056
From:
Registered: Apr 2009
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posted April 24, 2013 05:00 PM
Yes and having watched people who could afford when they bought struggling to keep their homes i am glad i gave up the "credit card life" years ago.It's paying thru the nose for next to nothing that disheartens most, i think... IP: Logged |
katatonic
Knowflake Posts: 10056
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Registered: Apr 2009
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posted April 24, 2013 05:03 PM
The other thing that rankles is watching the rich profit from one's own need to sacrifice, and resenting being asked to give more to help EVERYBODY INCLUDING THEMSELVES. Just a go figure moment!IP: Logged |
SpooL
Knowflake Posts: 558
From: Toronto/Ottawa,Canada
Registered: Apr 2009
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posted April 24, 2013 05:08 PM
quote:
Originally posted by katatonic:
The other thing that rankles is watching the rich profit from one's own need to sacrifice, and resenting being asked to give more to help EVERYBODY INCLUDING THEMSELVES. Just a go figure moment!
The problem is in a capitalist society, your either a winner or a looser. The looser will always cry foul. I think if people studied the growth of Asia in the 1950's. They will realize that Asia recovered because of thrift, hard work, good education system and cooperation. All of these traits are lacking in North America. To add insult to injury top on a society collapse. The best thing is to be aware of whats going on and plan ahead. If people were paying attention they should have been aware of the downturn as early as late 2005 or early 2006 and started planing for the recession. Even as early as 2001. IP: Logged |
mockingbird
Knowflake Posts: 1550
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Registered: Dec 2011
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posted April 24, 2013 05:15 PM
Google "relative deprivation".*goes back to building a chicken coop* ------------------
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mockingbird
Knowflake Posts: 1550
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posted April 24, 2013 05:18 PM
And, again, this is not about growth but about relative gain + the ability to leverage existing money and power to gain more money and power through successfully manipulating (and changing) the system in which one works.*for real goes back to building a chicken coop* ------------------
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katatonic
Knowflake Posts: 10056
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posted April 24, 2013 05:20 PM
Sacrifice means different things to different people. Some have little to sacrifice but they are being told they are lazy takers, even if they are working to keep abive water. Others call adding at a slower rate to their pile "sacrifice".IP: Logged |
juniperb
Moderator Posts: 6507
From: Blue Star Kachina
Registered: Apr 2009
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posted April 24, 2013 05:26 PM
I wonder if the figures include many medical insurances doubling in light of Obamacare? ------------------
We need to listen to our own song, and share it with others, but not force it on them. Our songs are different. They should be in harmony with each other. ~ Mattie Stepanek IP: Logged |
katatonic
Knowflake Posts: 10056
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posted April 24, 2013 05:27 PM
Ian i have an excellent education, have always been thrifty and cooperative. But i have never had money to invest. My mother did invest, owbed her own home and had insurance but in the 90s her folioand house were not enough tp pay for the health issues she developed.When i say owned, i mean outright. But when sje had to retire at 75 she had basically not enough to live on let alone splurge. This is what the medical insurance industry has done to the middle class..for starters. I don't have enough land to build a chicken coop on!!!  IP: Logged |
Node
Knowflake Posts: 2256
From: 1,981 mi East of Truth or Consequences NM
Registered: Apr 2009
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posted April 24, 2013 05:39 PM
YTA quote:
--------------------------------------------------------------------------------
Most people ought to take advantage of their employer's 3% matching 401k plans
The people who need it most do not work for an employer w/401K plans SpooL quote:
The problem is people are not willing to do the necessary sacrifices.
I agree to some extent- why do people insist on driving huge SUV's? Or, as YTA said Pick-Ups. SUV's are built on a truck platform. These are some of the poorest gas economy & maintenance/repair vehicles on the market. Yet Americans love the sense of power it gives them on the road. For the poorest however, and their numbers are increasing daily [ extrapolated from the shrinking middle class ] This sacrifice comes from where? Because they have nothing! Living in section 8 housing and putting food on the table equates to a nutritionally bankrupt meal that costs less money. High fructose & carbs are cheap.  The amounts of money that the CEO's are raking in with the *new* tax structure comes from the bonuses that conveniently forgo tax on their 401K plans or deferred compensation.
The bigger the CEO's performance pay, the bigger the company's tax deduction.
:edited to add/
In my area there are a whole lot of Luxury sedans & coupes on the road....while these appear to get good gas mil, sometimes- they are much worse than the SUV's [ huge engines ] IP: Logged |
SpooL
Knowflake Posts: 558
From: Toronto/Ottawa,Canada
Registered: Apr 2009
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posted April 24, 2013 09:46 PM
quote:
Originally posted by Node:
...For the poorest however, and their numbers are increasing daily [ extrapolated from the shrinking middle class ] This sacrifice comes from where? Because they have nothing!....
For the poorest its a different story, I agree they have nothing. Although, I have the most respect for the poorest, it is amazing how far they can stretch there dollar. This is when sociology comes into play, in Spain and places in Europe that are the hardest hit. Its okay to move back with family members and families take care of each other. In N. America I don't see the same family closeness and lack of people taking care of each other. When I say sacrifice I look at it this way.
If you compare the working and living standards in India. There really poor and its more of matter of I need to work so I can eat, not pay for the luxuries we enjoy in N. America. I doubt, the average N. American is willing to change there life style around and be as competitive as it is in India. We've had life so good in the western world that were blinded to be outsourced, when we are eventually outsourced it will be too late to reverse the trend. The living standards in N. America have created the problem were costs are to high and rising fast while wages are steady. You really need to be earning at least 70,000 a year just to be able to pay the mortgage, food, insurance. For the middle class on the way to becoming poor, I would say start cutting back and save. This is when financial planing comes into play. We were fortunate that when my mom and dad lost there jobs they saved all the time and made sure the house was paid off. I know I call my mom "cheap" but I can understand her thinking now. She cut back were she could to pay the house off asap. There both working again, and are at almost the same earning levels they previously were at. I think the average N. American doesn't think that way, they will pay there house off in 20 - 25 yrs and not even consider rate changes and the possibility of real estate values fluctuating. If they lose there job they have so much other bills that there finished. I agree to tax cuts, if and only its keeps the businesses going and promotes reinvestment because thats what tax cuts are really meant to do. But, even the wealthiest are unsure were the markets are heading so they will not reinvest and that's when its wrong. quote:
Originally posted by Node:
...Living in section 8 housing and putting food on the table equates to a nutritionally bankrupt meal that costs less money. High fructose & carbs are cheap....
Without a doubt, that's why McDonalds and Wendy's are considered cheap sources of calories. Short term is cheap, but in the long term how much are the health effects of obesity? how much will it cost to live with diabetes the rest of your life? Again, people don't consider long term they look at short term. quote:
Originally posted by katatonic:
....I don't have enough land to build a chicken coop on!!!
Land is half the problem, the other half is the municipality may have bylaws against it But, good for you for trying katonic. I know a family friend that has her own, its to messy for me thought.
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Node
Knowflake Posts: 2256
From: 1,981 mi East of Truth or Consequences NM
Registered: Apr 2009
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posted April 24, 2013 10:02 PM
offtopic
Spain is really in the poo, I was reading the other day that thousands of Andalusian stallions were being slaughtered for food, or abandoned to starve, because it costs 300 Euros a month to keep them.
30% unemployment
http://rt.com/news/spain-recession-horses-slaughter-271/ IP: Logged |
katatonic
Knowflake Posts: 10056
From:
Registered: Apr 2009
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posted April 24, 2013 11:18 PM
Yes and Andalusia is so protective of its chsracter...I have never gone for the mortgage thing, when i had the money the market was inflated and vice verse...but i would rather payit off fast thsn do what so many i know have done, getting trapped in the refinance circle-maze.. But you're right too sbout the family thing..i am actually going to share with daughter and grsndkids for awhile, to make things more workable for everyone, but many people consider this "admitting defeat" rather than being creative. Have to admit i have held onti my own space despite the flooding in wintet out of stubborness and not wantinf to look weak...it is not so long since people shared housing over several generations reallt. People adapt. I think a lot of people have ditched the trappings and regrouped. Andmany are living "under the table" too. IP: Logged |
mockingbird
Knowflake Posts: 1550
From:
Registered: Dec 2011
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posted April 25, 2013 08:26 AM
quote:
Originally posted by juniperb:
I wonder if the figures include many medical insurances doubling in light of Obamacare?
Hopefully, as well as the record profits being raked in (and bonuses granted) by the insurance companies.------------------
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MoonWitch
Moderator Posts: 1192
From: The Beach
Registered: Apr 2009
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posted April 25, 2013 09:01 AM
A net worth of 500,000 is considered wealthy??IP: Logged |
mockingbird
Knowflake Posts: 1550
From:
Registered: Dec 2011
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posted April 25, 2013 09:13 AM
^ Statistically, yes.
http://en.m.wikipedia.org/wiki/Household_income_in_the_United_States It consistently surprises me how insular economic brackets are in the US. ------------------
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MoonWitch
Moderator Posts: 1192
From: The Beach
Registered: Apr 2009
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posted April 25, 2013 09:22 AM
That is a link for income which is different than net worth. I realize that someone with an income of half a million dollars a year would be considered reasonably wealthy. I'm surprised that someone with a net worth of half a million would automatically be considered wealthy since they are completely different scenarios. IP: Logged | |
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