The Associated Press reports that after 5 ½ years Americans have finally regained the $16 trillion in wealth that they lost to the Great Recession. The AP credits “surging stock prices and steady home-price increases “for the rebound.
But before we start popping champagne corks and singing “Happy Days Are Here Again” we might want to dig into the weeds of what these numbers really mean. The fact is not everyone is joining the celebration.
While it is true that our economic situation is improving, the vast majority of the growth is finding its way into the pockets of the top 1% of the population. According to the “The Atlantic” household income adjusted for inflation, has grown 12 times more for the top 1% than the middle 20% of the population…and 24 times more than the bottom 20%. Since 1979 the top 5% of the country took home more than half of total income growth. The top 1% took nearly 40%. While happy days are here for the very rich, the middle class has yet to recover from a perfect storm of rising unemployment, globalization, outsourcing, advanced technology and the declining impact of labor unions. Corporate profits and CEO compensation may be skyrocketing but middle class wages continue to decline.
Today’s jobs report shows that the economy created 236,000 private sector jobs; up from the expected 160,000. Unemployment dropped to 7.7%. The financial gurus call these numbers “robust.” Compared to the Bush years, when the country was losing 750,000 jobs/month; they are outstanding. But unemployment is still too high and 236,000 new jobs are still far less than the 320,000 needed each month to really grow the economy.
We don’t mean to be a Debbie Downer and spoil the party. But the fact is the economic resurrection that is occurring in this country is fattening the wallets of the wealthiest while the middle class counts its pocket change.
The middle class is the economic engine that drives this economy. When that engine begins to purr we’ll be happy to join in the celebration.