|By Bob Weaver|
(Statistics from US Federal Reserve/Pew Research Center Report)
Believe what spin you desire about what politicians and media are saying about the nation's economy, but consider the government's own statistics and a Pew Center Report.
In the United States, wealth has gone to a highly concentrated number of people in relatively few hands.
As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) held 50.5%.
That means that just 20% of the people owned a remarkable 85% of the nation's wealth.
That leaves only 15% of the wealth for the bottom 80% (wage and salary workers), or what most have called the Middle Class.
Average Americans, generally called the Middle Class, are in serious trouble.
The trouble has been building through several Washington administrations and will likely continue for years to come.
This election cycle has the parties blaming each other for joblessness, and who can best to fix it.
The overlay is a $16 trillion national debt, blown astronomically since the Clinton administration, and while America was sleeping, Washington has become a debtor nation to China.
Rarely mentioned by politicians and mainstream media is the globalization and outsourcing of 20-30 million jobs, jobs once held by the Middle Class, both blue collar and 21st Century tech jobs.
Politicians rarely mention revising the tens of thousand of pages of the federal tax code, which mostly gives breaks to special interests.
There is no doubt that globalization has coincided with highest unemployment among the less skilled and with widening income inequality.
Americans saw their median wealth plummet 40 percent from 2007 to 2010, according to a report released by the US Federal Reserve, with the middle class suffering the brunt of the decline.
The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010.
That puts Americans roughly on par with where they were in 1992, according to the Federal Reserve report.
The data represent one of the most detailed looks at how the economic downturn has altered the landscape of family finance.
Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate.
Homeownership, destroyed by big money financial wizards, was once heralded as a pathway to wealth. Now it is an albatross.
The findings underscore the depth of the wounds of the financial crisis and how far many families remain from healing.
If the recession set Americans back 20 years, economists say, the road forward is sure to be a long one. And so far, the country has seen only a halting recovery.
The thrust of the current presidential campaign is that it should have happened during Obama's term.
“It’s hard to overstate how serious the collapse in the economy was,” said Mark Zandi, chief economist for Moody’s Analytics. “We were in free fall.”
Roughly half of middle-class Americans remained on the same economic rung during the downturn, the Fed found.
Their median net worth — the value of assets such as homes, automobiles and stocks minus any debt — suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose.
Unlike the collapse during the Great Depression, most American and multi-national corporations are making record profits.
But the recovery progress was undermined by other factors, leaving the median level of family debt unchanged.
The feds report said more families reported taking out education loans. Nearly 11 percent said they were at least 60 days late paying a bill, up from 7 percent in 2007.
Not only were Americans still facing significant debts, but they were making less money.
The report said median income fell nearly 8 percent, to $45,800, in 2010. The median value of stock-market-based retirement accounts declined 7 percent, to $44,000.
But it was the implosion of the housing market that inflicted much of the pain. The median value of Americans’ stake in their homes fell by 42 percent between 2007 and 2010, to $55,000, according to the Fed.
Not only are American workers facing less earned income, many jobs have cut benefits, including health and retirement. Some have eliminated most benefits, because employers say they can't afford them.
The poorest families suffered the biggest loss of wealth from the drop in real estate prices. But middle-class Americans rely on housing for a larger part of their net worth. For some, it accounts for just more than half of their assets. That means every step downward is felt more acutely.
Rakesh Kochhar, associate director of research at the Pew Center, calls this phenomenon the “reverse wealth effect.”
As consumers watched the value of their homes rise during the boom, they felt more confident spending money, even if they did not actually cash on the gains.
Now, the stagnant housing market has made many Americans wary of spending, even if their losses are just on paper.
The findings track research released last year that showed a dramatic drop in household wealth during the recession, particularly among minorities. That study found record-high disparities between whites’ wealth and that of blacks and Hispanics.
The Fed’s survey is conducted every three years. Although there have been some signs that the recovery has picked up — housing prices have begun to stabilize and unemployment has fallen — Fed economists said those improvements largely do not change the feds findings.
A Pew Research Center study says the vast majority of middle-class Americans say their financial well-being has been crimped in the past 10 years by sagging home values and dreary job prospects.
About 85 percent of middle-class people say it's tougher now than a decade ago to maintain their living standards, according to Pew.
"Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some - but by no means all of its characteristic faith in the future," the report states.
The survey, "The Lost Decade of the Middle Class," defines a middle-income household as a family of three earning $39,418 to $118,255.
The Pew report reiterates what has become a common theme among demographers and economists: The financial status and outlook for the middle and lower classes has weakened while the fortunes of the wealthy have significantly brightened.
Median middle-class income dropped 5 percent in the 2000s, while net worth plummeted 28 percent to $93,150 from $129,582, as housing prices shriveled, the report said.
The upper class rose to 20 percent of the population from 14 percent during that same span, meaning more than half of the decline in the middle class is attributable to people advancing to the wealthier category.
But the upper class's share of national income has risen far more dramatically, climbing to 46 percent from 29 percent four decades ago. In other words, the rich have gotten much richer.
The Pew report was based on a survey of 2,508 adults, including 1,287 who describe themselves as middle-class, as well as Pew's analysis of data from the Census Bureau and the Federal Reserve.
In the meantime, enjoy the hubris of the $4 billion or more presidential campaign.