ECONOMIC RECOVERY: WONDERING WHY IT’S TAKING SO LONG?

THE INCONVENIENCE OF WEALTH INEQUALITY 




If you, like me, are not already fabulously wealthy, you may be thinking that even with all the good economic news lately – unemployment rate has fallen to 6.2%, the stock market is at record highs, deficits have gone from 9.8% of Gross Domestic Product (GDP) in 2009 to 2.8% today - our economic recovery seems to have passed me and you by.  Sure, I feel much better about our economic state of affairs today than, say, back in 2008 and 2009, but somehow I’m not feeling all the usual warmth and fuzziness that normally comes with recovery after a recession.  Seems to be that the recovery train has stopped to pick up someone else; not me.  And guess what?  The latest data shows that, indeed, this is the case for most of us.

A few inconvenient facts:

THE NET WORTH OF AVERAGE AMERICANS IN 2014 IS ONLY 57% OF WHAT IT WAS IN 2007.

IN MID- 2013 THE AVERAGE VALUE OF A SINGLE-FAMILY HOUSE WAS 20% LESS THAN IN 2007.

IN 2003 HOUSEHOLD NET WORTH = $87,992 (Adjusted for inflation)

IN 2013 HOUSEHOLD NET WORTH = $56,335 (Adjusted for inflation)

IN ONE DECADE - 2003 to 2013 - ORDINARY AMERICANS GOT 36% POORER.

WEALTH INEQUALITY HAS NEARLY DOUBLED FROM 2003 TO 2013

BETWEEN 1984 AND 2013 THIS IS WHAT’S HAPPENED TO AMERICANS:

            *  THE 95%-TILE SAW THEIR WEALTH DOUBLED
            *  THE 75%-TILE SAW THEIR WEALTH  INCREASE BY ONE-THIRD
            *  THE MEDIAN – 50%-TILE - SAW THEIR WEALTH DECREASE BY 20%
            *  FOLKS IN THE 25%-TILE SAW THEIR WEALTH DECREASE BY 60%

IT'S NOT A PRETTY PICTURE. 

So if you feel that you are struggling more just to stay afloat and if you feel that the economic recovery has kind of passed you by, you’re right.  It has.  This is the reality of the situation   If you are what we call “an ordinary American” – let’s say like the bottom 80% of the US population - when if comes to wealth (and incomes for that matter) the past thirty years have not been profitable for you, to say nothing of the past six or seven.

The already rich?  They’ve done quite well, that you very much.   

And do not for a moment that this situation is a result of some “unseen economic hand” at work in our society or that the current state of affairs is the result of some mysterious force at work over which we – and our economic policy wonks – have no control.  Nothing could be further from the truth.  Our current wealth and income disparities are the direct result of the adoption and implementation of conservative economic theories, policies, laws and regulations at the Federal, State and local levels of our governments.  And both Democrats and Republicans are responsible.  

But, be very thankful that you don’t live in Europe.  The EU and the European Central Bank went the austerity route as the solution to the economic collapse in 2008 and nearly all European countries cut government spending, reduced pensions, cut vacation times, cut government employees, elected conservative leaders – you know, all the things that the Tea Party here has been proposing.  (And that Republican Kansas Governor Sam Brownback, has done, much, it looks like, to his regret). Western Europe – unlike the U.S. – is currently in danger of a second recession.  Unemployment here in the U.S. stands at 6.2%.  

In Europe:     




REMEMBER, ALTHOUGH ECONOMISTS WOULD LIKE ALL OF TO BELIEVE THAT ECONOMICS IS A SCIENCE LIKE PHYSICS AND CHEMISTRY, IT'S NOT.  ANY FIELD OF ENDEAVOR THAT DEPENDS ON HUMAN ACTIONS FOR IT'S RESULTS CAN ONLY BE TERMED A SOCIAL SCIENCE LIKE PSYCHOLOGY OR POLITICAL SCIENCE.   

DON'T BE FOOLED!  

NOTE:  All data courtesy of the Russell Sate Foundation


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