We’re in the longest economic expansion ever, but it’s the rich who are getting richer

0


We are now officially in the longest economic expansion of the United States in history – one that is perhaps best characterized by the excesses of extreme wealth and an ever-widening chasm between the unfathomable rich and everyone else.

Indeed, as the expansion entered its 121st record month on Monday, signs of a new golden age are everywhere.

Big-ticket deals are growing, from corporate mergers and acquisitions to individuals buying luxury penthouses, sports teams, yachts and no-frills pilgrimages to the ends of the earth. And while these deals grab the headlines, there’s a deeper trend at work. The number of billionaires in the United States has more than doubled over the past decade, from 267 in 2008 to 607 last year, according to UBS.

“The rich got richer and they got richer faster,” said John Mathews, head of private wealth management and ultra high net worth at UBS Global Wealth Management. “The drive or the desire to consume has just gone upmarket.”

But there are also signs of struggle and stagnation at lower income levels. The richest fifth of Americans hold 88% of the country’s wealth, a share that has increased since before the crisis, according to Federal Reserve data through 2016. Meanwhile, the number of people receiving food stamps federal governments exceed 39 million, below the peak of 2013 but still up 40% from 2008, even though the country’s population grew only about 8%.

However, ten years ago, this type of growth was not possible. The financial system was in shambles and people feared bank failures would definitely undermine capitalism. Policymakers struggled to stabilize markets and raise asset prices when housing markets collapsed. They have done less to tackle income and wealth inequalities.

Today, many of the signs of the mega-wealth that preceded this financial crisis are once again visible.

The cost of dining at French Laundry, the chic Californian restaurant, has risen 35% to $ 325 per person, from $ 240 a decade ago, beating inflation by nearly 20%.

Undergraduate tuition at Columbia University, the mainstay of the Ivy League, is a hair’s breadth of less than $ 60,000 a year, a half increase from the $ 39,000 in the 2008 school year .

The S&P 500 has tripled in the past decade.

Hedge fund boss Ken Griffin set a record when he bought a $ 238 million condominium penthouse on Billionaires’ Row just outside of Central Park in New York City.

Yet rents in New York have grown twice as fast as wages, according to StreetEasy data from 2010 to 2017, squeezing low-income residents. Home prices were near their lowest affordability levels since 2008, according to research from ATTOM Data Solutions. And the number of homeless people sleeping in shelters across the city is 70% higher than a decade ago, according to the Coalition for the Homeless, an advocacy group.

“Underfunded areas don’t improve; housing opportunities for them don’t improve,” Carolyn Valli, CEO of Central Berkshire Habitat For Humanity, in Pittsfield, Mass., Said at a recent event. economic policy. She said high health care costs and the lack of large employers mean fewer jobs in some areas. The costs of food, utilities and shelter, meanwhile, remain high. “It doesn’t look like a boom yet.”

Anger over what some see as the unfair economy has erupted into the country’s politics, with Democratic presidential candidates vowing to cut healthcare costs, secure jobs and tax the rich .

Policymakers believe the expansion could weaken as the stimulus from tax cuts and low interest rates wears off as a US-China trade skirmish still brews. They fear that even the disappointing gains made by low-income people over the past decade are fragile, and that those who have recently entered the workforce may be the first to be made redundant in a recession.

“The benefits of this long recovery are now reaching these communities to a degree that has not been felt for many years,” Federal Reserve Chairman Jerome Powell said last week. “Many people who in the past struggled to stay in the workforce now have the opportunity to add new and better chapters to their stories. All of this underlines how important it is to support this expansion. “


Share.

About Author

Comments are closed.