US mid­dle class gets richer, but wealthy do even bet­ter

Ripon Bulletin - - Sports/dollars & Sense -

WASH­ING­TON (AP) — Most Amer­i­can fam­i­lies grew richer be­tween 2013 and 2016, but the wealth­i­est house­holds pulled even fur­ther ahead, wors­en­ing the na­tion’s mas­sive dis­par­i­ties in wealth and in­come.

The me­dian net worth of all Amer­i­can fam­i­lies rose 16 per­cent last year from 2013 to $97,300, ac­cord­ing to a Fed­eral Re­serve sur­vey re­leased Wed­nes­day. The me­dian is the point where half of fam­i­lies fall be­low and half above. That’s the first gain for mid­dle class house­holds since the re­ces­sion up­ended the econ­omy nearly a decade ago.

The fig­ures echo data re­leased ear­lier this month from the Cen­sus Bureau, which also showed mid­dle-class in­comes ris­ing. Since 2015, the eco­nomic re­cov­ery’s ben­e­fits have been spread broadly, to nearly all in­come lev­els and racial and eth­nic groups. But those gains ar­rived after the first five years of the re­cov­ery, when higher-earn­ing house­holds reaped most of the ben­e­fits. A low and fall­ing un­em­ploy­ment rate has helped push up pay, while ris­ing home prices have re­stored some wealth to mid­dle in­come fam­i­lies.

Even with the im­prove­ment, the Fed’s re­port, known as the Sur­vey of Consumer Fi­nances , starkly il­lus­trates the depth of the na­tion’s wealth and in­come gaps. The dis­par­i­ties ex­ist along lines of in­come, race and eth­nic­ity, and be­tween cities and ru­ral dwellers.

“You’re see­ing a con­tin­u­ing pulling apart in the wealth and in­come data,” said Elise Gould, se­nior econ­o­mist at the Eco­nomic Pol­icy In­sti­tute.

It also points to why so many Amer­i­cans re­main frus­trated with the econ­omy: On many mea­sures, most fam­i­lies still haven’t fully re­cov­ered from the 2008-2009 down­turn. In fact, the me­dian mea­sures for wealth and in­come still trail their 2001 lev­els.

Lael Brainard, a Fed pol­i­cy­maker, raised con­cerns in a speech Tues­day that long-run­ning in­equal­i­ties may hob­ble U.S. eco­nomic growth. Greater con­cen­tra­tions of wealth and in­come could slow consumer spend­ing, which ac­counts for about two-thirds of eco­nomic ac­tiv­ity, be­cause richer house­holds typ­i­cally save a larger pro­por­tion of a pay raise or other in­come gain than mid­dle- and lower-in­come ones do.

The Fed’s sur­vey found that even as me­dian net worth climbed 16 per­cent, av­er­age net worth rose more quickly, by 26 per­cent to $692,100. Those dif­fer­ences be­tween the me­dian and av­er­age fig­ures mostly re­flect stronger gains at the top of the in­come scale. Net worth in­cludes the value of housing, stocks, mu­tual funds and other sav­ings mi­nus mort­gages and other debts.

Black and His­panic fam­i­lies re­ported large wealth gains, but wealth gaps along racial lines barely nar­rowed. Me­dian wealth for an African-Amer­i­can fam­ily was $17,600 last year, up 29 per­cent from 2013. That’s a much big­ger gain than the 17 per­cent in­crease for whites.

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