The Wealth of America’s Bottom 50% Doubled

How can this be?  September 28, 2022, we have Senator Bernie Sanders tweeting (I don’t, guess I need to eat some bird seed).

The obscene level of income and wealth inequality in America is a profoundly moral issue that we cannot continue to ignore or sweep under the rug. A society cannot sustain itself when so few have so much while so many have so little.

Here is Bernie’s findings as supplied by the Congressional Budget Office. Note the dark brown at the bottom of the chart. The chart was done in 2019

In 1989, the bottom 50% held 4% of the wealth. By 2019 the 50% held 2% of the wealth. Let’s get to the real story.

“The Wealth of America’s Bottom 50 Percent Has Doubled,” (theintercept.com), Jon Schwarz.

The CBO’s report only provided figures through 2019. What has happened since then and during the years of the pandemic? According to Powell,

More increases in Fed Rates are likely — and they will hurt, slowing growth and weakening the labor market. Unfortunately, there is no other good option.

Inflation must be stopped. Mr. Powell stressed that Americans are already suffering from rising prices, and low-income people have been hit the hardest.

As detailed in the graph above, the last several years have not been an economic disaster for the bottom 50 percent of U.S. households. We can easily see they have experienced the best time during the past 30 years. No, America’s bottom 50% are not living high on the hog enjoying the best pork cuts as taken from the back and upper legs. What has been experienced under Democrats Biden’s policies is a doubling of the net worth of the poorer 50 percent since the first quarter of 2020. It is now far higher than it’s ever been in U.S. history.

You can catch the earlier history since 1989 to 2019 in the Intercept article.

Wages have not been decreasing in real terms by inflation. Even as prices have gone up, wages have mostly kept pace. Real median wage increased sharply at the beginning of the pandemic. It has since fallen sharply and is now almost exactly the same as during the first quarter of 2020. Guess the Fed Increases have been working.

Half the increase in wealth is due to an increase in housing equity. Mostly due to the run-up in home prices and inflation reducing the value of fixed-rate mortgages. The federal government also provided large amounts of financial support to the bottom 50 percent via the 2020 CARES Act, expanded unemployment benefits, and the 2021 Child Tax Credit, plus more. Together with low unemployment and increased worker leverage, this provides much of the explanation as to why.

We are getting flawed stories from the media as to what is actually happening. As told by Intercept. Washington Post and many other media outlets report “low-income people have been hit the hardest” by recent inflation, and we must slow the economy (and lower wages and hike unemployment) for their benefit. In other words whack the peasants to save them from inflation and the economy. Save them from corporations increased prices and contrived supply chain shortages.

So here we are again. The prospects for most of the bottom 50% were worse in the past in a lower-inflation economy. To which their situation did not excite the concerns of the corporate media. The Fed is going to correct the situation for the bottom 50% while the higher prices and the supply chain shortages will still continue. The difference being the bottom 50% will no longer have the funds to adapt.

.”The Wealth of America’s Bottom 50 Percent Has Doubled,” (theintercept.com), Jon Schwarz.