Photo: Eric Goldschein
Luxury retailers are smiling. So are the owners of high-end restaurants, sellers of upscale cars, vacation planners, financial advisors, and personal coaches. For them and their customers and clients the recession is over. The recovery is now full speed.But the rest of America isn’t enjoying an recovery. It’s still sick. Many Americans remain in critical condition.
The Commerce Department reported Thursday that the economy grew at a 3 per cent annual rate last quarter (far better than the measly 1.8 per cent third quarter growth). Personal income also jumped. Americans raked in over $13 trillion, $3.3 billion more than previously thought.
Yet it’s almost a certainly that all the gains went to the top 10 per cent, and the lion’s share to the top 1 per cent. Over a third of the gains went to 15,600 super-rich households in the top one-tenth of one per cent.
We don’t know this for sure because all the data aren’t in for 2011. But this is what happened in 2010, the most recent year for which we have reliable data, and there’s no reason to believe the trajectory changed in 2011 or that it will change this year.
In fact, recoveries are becoming more and more lopsided.
The top 1 per cent got 45 per cent of Clinton-era economic growth, and 65 per cent of the economic growth during the Bush era.
According to an analysis of tax returns by Emmanuel Saez and Thomas Pikkety, the top 1 per cent pocketed 93 per cent of the gains in 2010. 37 per cent of the gains went to the top one-tenth of one per cent. No one below the richest 10 per cent saw any gain at all.
In fact, most of the bottom 90 per cent have lost ground. Their average adjusted gross income was $29,840 in 2010. That’s down $127 from 2009, and down $4,843 from 2000 (all adjusted for inflation).
Meanwhile, employer-provided benefits continue to decline among the bottom 90 per cent, according to the Commerce Department. The share of people with health insurance from their employers dropped from 59.8 per cent in 2007 to 55.3 per cent in 2010. And the share of private-sector workers with retirement plans dropped from 42 per cent in 2007 to 39.5 per cent in 2010.
If you’re among the richest 10 per cent, a big chunk of your savings are in the stock market where you’ve had nice gains over the last two years. The value of financial assets held by Americans surged by $1.46 trillion in the fourth quarter of 2011.
But if you’re in the bottom 90 per cent, you own few if any shares of stock. Your biggest asset is your home. Home prices are down over a third from their 2006 peak, and they’re still dropping. The median house price in February was 6.2 per cent lower than a year ago.
Official Washington doesn’t want to talk about this lopsided recovery. The Obama administration is touting the recovery, period, without mentioning how narrow it is.
Republicans would rather not talk about widening inequality to begin with. The reverse-Robin Hood budget plan just announced by Paul Ryan and House Republicans (and endorsed by Mitt Romney) would make the lopsidedness far worse – dramatically cutting taxes on the rich and slashing public services everyone else depends on.
Fed Chief Ben Bernanke – who doesn’t have to face voters on Election Day – says the U.S. economy needs to grow faster if it’s to produce enough jobs to bring down unemployment. But he leaves out the critical point.
We can’t possibly grow faster if the vast majority of Americans, who are still losing ground, don’t have the money to buy more of the things American workers produce. There’s no way spending by the richest 10 per cent – the only ones gaining ground – will be enough to get the economy out of first gear.
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