Wednesday Apr 24, 201306:32 AM GMT
Wealth of nearly all Americans fell after the recession
Wed Apr 24, 2013 6:29AM
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Oracle's Larry Ellison was top-earning CEO with $96.1 million, compared to the average worker's pay of $34,645 last year.

 

The richest 7% of American families saw their average wealth soar 28% from 2009 to 2011, while the remaining households lost 4% of their net worth over the same period, according to a new report.

 

The analysis of Census Bureau data by the Pew Research Center draws on the most recent statistics on wealth. The findings throw into stark relief the dramatically uneven nature of the recovery.

 

The economy officially emerged from recession in mid-2009, and since then, affluent families have benefited handsomely from recovering stock prices and surging gains in bonds.

 

The report found that the average wealth of the upper 7% of households jumped to $3.17 million in 2011 from $2.48 million two years earlier, thanks largely to the strengthening stock market. Six out of 10 households with a net worth - assets minus debts - of $500,000 or more owned stocks and mutual funds in 2011.

 

Most of the wealth of the remaining 93%, however, has been tied up in homes, and the values plummeted both during and after the Great Recession and only recently have been climbing. Only 13% of those households owned stocks and bonds, and their average wealth dipped to $133,817 from $139,896.

 

The housing market, though recovering, has not grown nearly as fast as stocks and other financial assets. And that means the country's wealth gap is likely to have widened further in the last 16 months.

 

"This recovery is sort of unique in that the housing market, rather than leading, has lagged," said Richard Fry, a coauthor of the Pew report.

 

Edward Wolff, an economist at New York University who has written extensively on wealth distribution, said the new Pew report is helpful in understanding how "very sensitive wealth is to the housing market."

 

Close to two-thirds of U.S. households own their homes. But of more concern than un-recovered home values, Wolff said, is the stagnant incomes of Americans.

 

Economists attributed the varying recovery in wealth partly to Fed policies that supported gains in stock and bond markets. "The Fed has kept things pretty good for the wealthy," Wolff said.

 

Fed officials have stated that their stimulus policies are aimed at promoting economic and job growth that also would benefit families with lower income and wealth.

 

But Sarah Raskin, a Fed governor, said in a speech last week that given the long-running trends of income and wealth inequality, "it is unlikely that cyclical improvements in the labor markets will do much to reverse these trends." LA Times

 

FACTS & FIGURES

 

The fact that the distribution of money and wealth in the United States is unfair has been evident in surveys taken since 1984, with only minor fluctuations from measure to measure. Gallup

 

The U.S. pay gap is the biggest in the world, according to a new study by AFL-CIO.

 

U.S. CEOs of the biggest firms made 354 times what the average rank-and-file worker earned in 2012- by far the widest pay gap in the world, according to the AFL-CIO. People’s World

 

Last year CEOs received an average $12.3 million while the average worker took home around $34, 645. People’s World

 

President Barack Obama has said his biggest goal is to revive the U.S. middle class. “Our country cannot succeed when a shrinking few do very well and a growing many barely make it”, the president said in his inaugural address. FT.com

 

However, Obama has been unable to fix America’s most unequal distribution of income since the 1920s. FT.com

 

AHT/ARA

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