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Pew: 93% Of Households Lost Net Worth 2009-11

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The Prof

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usatoday tuesday, an ap story

The richest Americans got richer during the first two years of the economic recovery while average net worth declined for 93% of the nation's households, the Pew Research Center said Tuesday.

The Pew report says wealth held by the richest 7% of households rose 28% 2009 through 2011, while the net worth of the other 93% of households dropped 4%.
Pew says the main reason for the widening gap is that affluent households have stocks and other financial holdings that increased in value, while the less wealthy have more of their assets in their homes, which haven't fully regained their value since the housing downturn.

The upper 7% of households owned 63% of the nation's household wealth in 2011, up from 56% in 2009, said the report, which analyzed Census Bureau data released last month.
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Pew: 93% of households lost net worth 2009-11

the top 7% are 8 million households, whose avg worth grew from 2.5M to 3.2

the rest of us 93 are 111 million strong, we own 134K but we used to sit on 140

the rich are 24:1 bigger than us, 18:1 in 09

that's net worth

look at incomes

october: Under Obama, Poor, Middle Class Incomes Fall Sharply, Rich Get Richer - Investors.com

and wages? the la times reported in august that 58% of the way too few jobs created in the "obama recovery" pay between 8 and 12 dollars per hour

Majority of new jobs in recovery are low-paying, study finds - Los Angeles Times

who's lying to you?

are you sure this guy knows what he's doing?
 
The Prof said:
the rich are 24:1 bigger than us, 18:1 in 09
that's net worth
look at incomes
Click to expand...
I've got a better idea: Let's look at the GINI Coefficient, which is the international measure of income inequality.

6a0133f3a4072c970b0153918ab6a1970b-550wi


Wow, it looks like the increase in inequality dates back to the mid 1970s. Whatever is causing it -- most likely tax breaks for the wealthy -- it sure looks like a long-term trend. Shocker.

In terms of the recent shift: The wealthy own stocks, the less affluent own homes -- which spent a long time sliding in value, and are finally starting to rebound. Inequality actually dropped briefly due to the recession, and is now back on the rise.


are you sure this guy knows what he's doing?
Click to expand...
Yep. Especially since:

• We aren't dealing with 25% unemployment and a deflation, which could have happened (though Bush 43 does deserve credit too)
• He hasn't been able to enact quite a bit of his agenda
• The alternative (austerity) really doesn't work
• In addition to dealing with the worst economic climate since the 1930s, we're dealing with long-term trends such as Baby Boomers retiring, an economic transition away from manufacturing, the rise of China, etc etc
• No president can snap his or her fingers and fix the economy overnight

E.g. It took Reagan the better part of 3 years to turn around unemployment; Bush 41 failed to turn around the economy after the S&L crisis, and was thus shown the door.

So no, no other president or candidate -- not even Reagan -- could wave a magic wand and make the real estate market recover, or give households back their lost net worth, or stop an economy transitioning from manufacturing to services, and so forth. It doesn't work that way.
 
a better idea
Click to expand...

is to see net worths and incomes increase

not equality of outcome at the cost of progression

The recession that ended three years ago this summer has been followed by the feeblest economic recovery since the Great Depression.

Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest.

Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.

More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.

America’s gross domestic product — the broadest measure of economic output — grew 6.8 percent from the April-June quarter of 2009 through the same quarter this year, the slowest in the first three years of a postwar recovery. GDP grew an average of 15.5 percent in the first three years of the eight other comebacks analyzed.

Consumer spending has grown just 6.5 percent since the recession ended, feeblest in a postwar recovery. In the first three years of previous recoveries, spending rose an average of nearly 14 percent.

The economy shed a staggering 8.8 million jobs during and shortly after the recession. Since employment hit bottom, the economy has created just over 4 million jobs. So the new hiring has replaced 46 percent of the lost jobs, by far the worst performance since World War II. In the previous eight recoveries, the economy had regained more than 350 percent of the jobs lost, on average.

Never before have so many Americans been unemployed for so long three years into a recovery. Nearly 5.2 million have been out of work for six months or more. The long-term unemployed account for 41 percent of the jobless; the highest mark in the other recoveries was 22 percent.

Adjusted for inflation, wages have fallen 0.8 percent. In the previous five recoveries —the records go back only to 1964 — real wages had gone up an average 1.5 percent at this point.
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Economic Recovery The Weakest Since WWII « CBS
 
I find it a bit ominous that they (the USG) even has this information. How do they know what I'm worth? Did they scan my bank accounts, value my car, list my real estate, check my credit card balances, review any loans I might have and then use that information to average me out with all you guys. Where is all that information? Of course, they know what we earn (unless we don't tell them) but all the rest of this data?
 
Much of the original analysis in this report is based on published tabulations of household wealth and asset ownership by the U.S. Census Bureau. Estimates of the 2011 level and composition of household wealth were released by the Census Bureau on March 21, 2013. The data can be downloaded from here. The Census Bureau’s wealth tabulations are based on its long-running longitudinal household survey called the Survey of Income and Program Participation (SIPP). The Census Bureau has published comparable wealth tabulations based on SIPP since 1984 (the data were collected in 1984; the report publication date was July 1986). SIPP is among the nation’s most prominent sources of data on the wealth of American households. The Board of Governors of the Federal Reserve System also publishes periodic estimates of the aggregate net worth of the nation’s households and nonprofit organizations. The most recent Federal Reserve System estimates are for the fourth quarter of 2012. However, these “flow of funds accounts” estimates provide no demographic information; that is, they do not illuminate which households own the nation’s wealth, only the total amount of that wealth. SIPP provides detailed demographic information on the ownership of wealth, and the 2011 wealth estimates provided by the Census Bureau are the most recent estimates available on which households own the nation’s wealth.4 The estimates are based on responses from a sample of the population and may differ from the actual values because of sampling variability and other factors.
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A Rise in Wealth for the Wealthy; Declines for the Lower 93% | Pew Social & Demographic Trends

today: Record Number of Households on Food Stamps-- 1 out of Every 5 | CNS News

per usda, ag dept
 
The Prof said:
usatoday tuesday, an ap story



Pew: 93% of households lost net worth 2009-11

the top 7% are 8 million households, whose avg worth grew from 2.5M to 3.2

the rest of us 93 are 111 million strong, we own 134K but we used to sit on 140

the rich are 24:1 bigger than us, 18:1 in 09

that's net worth

look at incomes

october: Under Obama, Poor, Middle Class Incomes Fall Sharply, Rich Get Richer - Investors.com

and wages? the la times reported in august that 58% of the way too few jobs created in the "obama recovery" pay between 8 and 12 dollars per hour

Majority of new jobs in recovery are low-paying, study finds - Los Angeles Times

who's lying to you?

are you sure this guy knows what he's doing?
Click to expand...

Looking at averages automatically throws all of your numbers out the window.
 
The Prof said:
is to see net worths and incomes increase
Click to expand...
Yeah, that's not a response.

You haven't acknowledged that inequality has been rising for decades -- or that the recession caused inequality to drop temporarily. E.g. the stock market took a dive for a few years, and is now climbing again.


not equality of outcome at the cost of progression
Click to expand...
Actually, it's a well-established fact that taxing the bejesus out of the wealthy, and using it for entitlement programs, does reduce income inequality. That's why Europe has lower rates of inequality than the US. This is not to say that's the type of policies we want, only that letting the free market "do its thing" will increase inequality, not reduce it.


And it's not surprising that the worst recession since the 1930s also has the weakest recovery. I mean, really, what did you expect -- that a massive real estate bubble and credit crisis would go away in 5 minutes? Again, not even Reagan could have done that.

I would say Obama made some mistakes, notably his attempts to stave off foreclosures failed miserably, and bank regulation is still inadequate. That said, neither McCain nor Romney would do any better.
 
Visbek said:
I would say Obama made some mistakes, notably his attempts to stave off foreclosures failed miserably, and bank regulation is still inadequate. That said, neither McCain nor Romney would do any better.
Click to expand...
Yeah, that's not reality either. You don't know how McCain or Romney would have done.
 
Visbek said:
I've got a better idea: Let's look at the GINI Coefficient, which is the international measure of income inequality.

6a0133f3a4072c970b0153918ab6a1970b-550wi


Wow, it looks like the increase in inequality dates back to the mid 1970s. Whatever is causing it -- most likely tax breaks for the wealthy -- it sure looks like a long-term trend. Shocker.
Click to expand...
Lovely source you have there. They apparently don't even know who was president in 1993.
 
humbolt said:
Yeah, that's not reality either. You don't know how McCain or Romney would have done.
Click to expand...

You don't "know" how anybody would do. We don't "know" how Al Gore would have done. Or Mondale or Thomas E. Dewey for that matter.
 
rocket88 said:
You don't "know" how anybody would do. We don't "know" how Al Gore would have done. Or Mondale or Thomas E. Dewey for that matter.
Click to expand...
I agree. That was my point. Therefore there is no rational basis for claiming that this or that unsuccessful presidential candidate could not have done any better.
 
I would suspect that the majority of the net worth decline is directly tied to depressed real estate values.
 
Taylor said:
Lovely source you have there. They apparently don't even know who was president in 1993.
Click to expand...
You're reading the chart wrong, it does correctly indicate Reagan-Bush until 1994. The tick mark is for 1995

In addition, pretty much every GINI chart will show the exact same data.
 
The only mistake of the stimulus was caving to perceived Republican demands for tax cuts, and shorting the actual stimulus part.

I already stated, quite explicitly, that IMO Obama didn't handle the foreclosure situation well, and regulation was insufficient. It should be noted that Republicans repeatedly watered down and tried to kill Dodd-Frank. There is no question that McCain or Romney wouldn't have even tried.
 
humbolt said:
Yeah, that's not reality either. You don't know how McCain or Romney would have done.
Click to expand...
I think we can make some educated guesses, at least if their campaign rhetoric is to be believed.
 
If you believe campaign rhetoric then I can get you a terrific bridge that you can collect tolls on. I think it's in Brooklyn but you could send your staff there to manage it unless you're using the Lear Jet this week.


Visbek said:
I think we can make some educated guesses, at least if their campaign rhetoric is to be believed.
Click to expand...
 
Visbek said:
The only mistake of the stimulus was caving to perceived Republican demands for tax cuts, and shorting the actual stimulus part.

I already stated, quite explicitly, that IMO Obama didn't handle the foreclosure situation well, and regulation was insufficient. It should be noted that Republicans repeatedly watered down and tried to kill Dodd-Frank. There is no question that McCain or Romney wouldn't have even tried.
Click to expand...

There is also the size issue. Gross stimulus was less than 5% of GDP, which wouldn't be much of an issue if it was disbursed in less than a year. Yet the majority of expenditure took place within a three year window peaking in 2010 (rate of change maximized in July 2010 if i memory serves me). Bipartisan support in regards to fiscal stimulus was over rated.
 
specklebang said:
If you believe campaign rhetoric then I can get you a terrific bridge that you can collect tolls on. I think it's in Brooklyn but you could send your staff there to manage it unless you're using the Lear Jet this week.
Click to expand...

Stimulus proposed by republican politicians has always been tax-cut heavy. Which can be extremely helpful during economic downturns that coexist with high inflation (tax cuts support disinflation). But for a 1930's esque economic downturn mired in asset deflation (net wealth declined by more than 100% of GDP), tax centered stimulus is a waste of time. Tax revenue as a percentage of output sits near post WWII lows, and still the recovery is meager at best.
 
Sure, I agree. A middle class tax cut would stir things up. Instead, working people just got a 2% increase in their tax burden. The USG created trillions and kept the beneficiaries to a few thousand people. Instead, they could have sent every tax-payer (who actually paid) a $10K 6 month Visa card (non-cash withdrawal) that expired in 6 months. But heaven forbid we give anything to workers. Bankers are the only people that matter.

The top brackets have been at historic lows for a decade - how well did that work out? Yet the crown jewel of Romney's proposals was to eliminate his 15% capital gains tax. With $300M in the bank, I doubt that this self-serving cut would have generated any kind of recovery.

...and before you say it - I did NOT vote for Obama (in 2012) and he has not done a good job of stewarding the nation through these difficult times. OTOH, I'm not sure that anything can solve the issues of automation and globalization of labor. So in a way, Obama's focus on welfare may be very appropriate since jobs are fewer and pay less and less. Me, I'm self-employed and I'm not affected. But I see how my tenants struggle and it makes me blue. I'm probably the only landlord in America who gives out rent cuts instead of rent increases - that's how sad I am.




Kushinator said:
Stimulus proposed by republican politicians has always been tax-cut heavy. Which can be extremely helpful during economic downturns that coexist with high inflation (tax cuts support disinflation). But for a 1930's esque economic downturn mired in asset deflation (net wealth declined by more than 100% of GDP), tax centered stimulus is a waste of time. Tax revenue as a percentage of output sits near post WWII lows, and still the recovery is meager at best.
Click to expand...
 
Visbek said:
Yeah, that's not a response.

You haven't acknowledged that inequality has been rising for decades -- or that the recession caused inequality to drop temporarily. E.g. the stock market took a dive for a few years, and is now climbing again.



Actually, it's a well-established fact that taxing the bejesus out of the wealthy, and using it for entitlement programs, does reduce income inequality. That's why Europe has lower rates of inequality than the US. This is not to say that's the type of policies we want, only that letting the free market "do its thing" will increase inequality, not reduce it.


And it's not surprising that the worst recession since the 1930s also has the weakest recovery. I mean, really, what did you expect -- that a massive real estate bubble and credit crisis would go away in 5 minutes? Again, not even Reagan could have done that.

I would say Obama made some mistakes, notably his attempts to stave off foreclosures failed miserably, and bank regulation is still inadequate. That said, neither McCain nor Romney would do any better.
Click to expand...

Wait until Obamacare is fully implemented, if you want to some inequality. The political class and the super rich are going to be the only folks to survive it.
 
apdst said:
Wait until Obamacare is fully implemented, if you want to some inequality. The political class and the super rich are going to be the only folks to survive it.
Click to expand...

Actually, a great deal of data supports the notion that access to health care is major determinant of income mobility. Health care inflation > overall inflation by more than 100%

2012-mmi-graph1.gif
 
specklebang said:
Sure, I agree. A middle class tax cut would stir things up. Instead, working people just got a 2% increase in their tax burden. The USG created trillions and kept the beneficiaries to a few thousand people. Instead, they could have sent every tax-payer (who actually paid) a $10K 6 month Visa card (non-cash withdrawal) that expired in 6 months. But heaven forbid we give anything to workers. Bankers are the only people that matter.
Click to expand...

A heavily indebted society is more likely to pay down debt with windfall proceeds. This can be observed by the Bush tax cuts throughout the 2000's. When Americans lose $15 trillion in net wealth, it is hard to believe they will alter their consumption patterns in a way that circumvents an economic downturn.
 
Kushinator said:
Actually, a great deal of data supports the notion that access to health care is major determinant of income mobility. Health care inflation > overall inflation by more than 100%

2012-mmi-graph1.gif
Click to expand...

As soon as Obamacare is fully implemented and Americans have LESS access to healthcare, we'll some bad results.
 
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