Rich got richer during the recovery, and rest got poorer, study says
The nation’s richest American households generally gained wealth during the first two years of the economic recovery, a new research report finds, while most American households saw their net worth drop.
The report, released Tuesday by the Pew Research Center, found that the mean net worth for the 7 percent of American households at the top of the wealth distribution rose by 28 percent between 2009 and 2011, the most recent data available.
Meanwhile, the mean net worth for the other 93 percent of American households fell by 4 percent during that period, according to Pew’s analysis of Census data.
Overall, the aggregate net worth for all American households rose between 2009 and 2011. But Pew’s more detailed analysis showed that the gains were concentrated among the wealthiest Americans, and the wealth gap increased during that time.
Economists say that’s a continuation of a trend toward more wealth being found at the top of the income scale.
“There’s been a growing concentration of wealth in this country for quite a while now, and it’s just really accelerated in the last, really, 15 years,” said Joel Naroff, chief economist with Naroff Economic Advisors, who was not involved in the Pew study.
The Great Recession officially ran from December of 2007 to June of 2009, but the recovery since that time has been weak and uneven.
The Pew researchers said rallies in stocks and bonds, which benefited affluent households with major investments, largely drove the discrepancy in wealth gains during those two years.
The housing market, where many other Americans derive a lot of their wealth, did not do that well during that period.
The Pew researchers said they focused on the top 7 percent of the wealth distribution because that was the tabulation available from the Census data. The report found that the mean net wealth for those 8 million households rose to around $3.17 million in 2011, from approximately $2.48 million in 2009.
For the other approximately 111 million households, mean net worth fell to nearly $134,000 in 2011, from nearly $140,000 in 2009.
The report’s authors note that some less-wealthy American households no doubt saw wealth gains during the period. In general, however, more of the households in that 93 percent saw their wealth fall rather than rise.
Naroff noted that income distribution is always shifting in one way or another, but the wealth gap has grown especially wide in recent years. That could pose problems for an economy that is largely driven by consumer spending.
“We haven’t seen it at least in 100 years as heavily distributed to the upper income side as we’re seeing now, and we don’t know whether that pattern is readily reversed,” he said. “And if it’s not reversed what happens to the economy that’s built on a consumer base? That’s the uncertainty that we have.”