Some Unsurprising News
For a couple of months now we have been assured that the economy is back on track and that things are improving here in the US. It certainly doesn't feel that way to most Americans, especially those who are unemployed, but it turns out that for some Americans, that rosy forecast is true.
Unemployment remains at near-record levels, and most Americans are struggling to rebuild their battered finances. But the country's wealthy are once again doing just fine, thank you.
No group was immune to the downturn. In 2008, as the financial crisis raged, the stock market hit bottom and the Great Recession ate into the economy, the number of millionaires in the United States plunged.
But last year the number of millionaires bounced up sharply, new data show.
And after that decline and rebound, the millionaire class held a larger percentage of the country's wealth than it did in 2007. [Emphasis added]
So, how did this happen? Well, it's actually quite simple, so simple that even an economic dunderhead like I am can understand it. It all has to do with what different groups of people do with what money they have:
The rebound largely reflects the stock market's powerful surge from 12-year lows reached in March 2008. Even though the long bear market that began in late 2007 continued into early last year, the Dow Jones industrials gained 19% over the course of 2009.
As a result, the expansion of the portfolios of the rich resembled the quick recovery of the profits of Wall Street investment banks and the bonuses of their executives, both of which depend on the health of the stock market.
The boom didn't reach all parts of the population. For the middle class, home values account for a larger slice of a family's wealth than they do for the rich. And unlike stocks, home values remain at or near the lows they reached after a painful crash.
In fact, real estate and other hard assets, such as $200,000 cars, aren't reflected in Boston Consulting Group's report. Had they been, the financial condition of ordinary Americans would have appeared even worse. [Emphasis added]
A person who is unemployed or underemployed is not going to be investing in the stock market. He or she is going to spend money on food and rent, perhaps even house payments. There isn't any margin for anything beyond trying to catch up on overdue bills. Asset growth is not an option for the lower and middle classes, at least not at this point in the recovery. At some point, this is going to be the kind of problem even the wealthy are going to have to face, especially if unemployment figures continue at or near double digits.
"The recession is going to end up accentuating the inequalities of income and wealth we've seen for 30 years," said Larry Mishel, president of the Economic Policy Institute in Washington. "This requires attention if we're going to see robust wealth growth going forward."
Our owners just might want to watch their backs.
Unemployment remains at near-record levels, and most Americans are struggling to rebuild their battered finances. But the country's wealthy are once again doing just fine, thank you.
No group was immune to the downturn. In 2008, as the financial crisis raged, the stock market hit bottom and the Great Recession ate into the economy, the number of millionaires in the United States plunged.
But last year the number of millionaires bounced up sharply, new data show.
And after that decline and rebound, the millionaire class held a larger percentage of the country's wealth than it did in 2007. [Emphasis added]
So, how did this happen? Well, it's actually quite simple, so simple that even an economic dunderhead like I am can understand it. It all has to do with what different groups of people do with what money they have:
The rebound largely reflects the stock market's powerful surge from 12-year lows reached in March 2008. Even though the long bear market that began in late 2007 continued into early last year, the Dow Jones industrials gained 19% over the course of 2009.
As a result, the expansion of the portfolios of the rich resembled the quick recovery of the profits of Wall Street investment banks and the bonuses of their executives, both of which depend on the health of the stock market.
The boom didn't reach all parts of the population. For the middle class, home values account for a larger slice of a family's wealth than they do for the rich. And unlike stocks, home values remain at or near the lows they reached after a painful crash.
In fact, real estate and other hard assets, such as $200,000 cars, aren't reflected in Boston Consulting Group's report. Had they been, the financial condition of ordinary Americans would have appeared even worse. [Emphasis added]
A person who is unemployed or underemployed is not going to be investing in the stock market. He or she is going to spend money on food and rent, perhaps even house payments. There isn't any margin for anything beyond trying to catch up on overdue bills. Asset growth is not an option for the lower and middle classes, at least not at this point in the recovery. At some point, this is going to be the kind of problem even the wealthy are going to have to face, especially if unemployment figures continue at or near double digits.
"The recession is going to end up accentuating the inequalities of income and wealth we've seen for 30 years," said Larry Mishel, president of the Economic Policy Institute in Washington. "This requires attention if we're going to see robust wealth growth going forward."
Our owners just might want to watch their backs.
Labels: Corporatocracy, Poverty
posted by Diane at 3:35 AM
0 Comments:
Post a Comment
<< Home