Recession and Austerity Good for the Rich

This Real News Network interview with James Henry gives yet another vantage on our have versus have-not economy. Henry comments on a new Pew study that found that in the early stages of the “recovery,” from 2009 to 2011, the net worth of the top 7% in the US increased while those of the rest of the public fell. And it continues to be striking how much those at the top are divorced from the rest of the population. For instance, I’d hazard that the reason so many economists over-estimated last quarter’s GDP growth was that they don’t have enough contact with the people who are struggling. The folks at the top of the heap are doing just fine, so that must be true generally, right?

But you can see more signs of stress even in the more insulated parts of New York City. Retail vacancies are up, even on the well-trafficked shopping streets, the worst since the post-2009 period. More restaurants seem to be taking a hit too, which suggests that non-expense-account diners are cutting back. And if ZIRP-supported NYC is looking a bit less robust, how well can the rest of the country be faring?

Update: in keeping with the spirit of this video, the New York Times reports, Wealth Gap Among Races Widened Since Recession. Key extracts:

Millions of Americans suffered a loss of wealth during the recession and the sluggish recovery that followed. But the last half-decade has proved far worse for black and Hispanic families than for white families, starkly widening the already large gulf in wealth between non-Hispanic white Americans and most minority groups, according to a new study from the Urban Institute.

“It was already dismal,” Darrick Hamilton, a professor at the New School in New York, said of the wealth gap between black and white households. “It got even worse.”…

The Urban Institute study found that the racial wealth gap yawned during the recession, even as the income gap between white Americans and nonwhite Americans remained stable. As of 2010, white families, on average, earned about $2 for every $1 that black and Hispanic families earned, a ratio that has remained roughly constant for the last 30 years. But when it comes to wealth — as measured by assets, like cash savings, homes and retirement accounts, minus debts, like mortgages and credit card balances — white families have far outpaced black and Hispanic ones. Before the recession, non-Hispanic white families, on average, were about four times as wealthy as nonwhite families, according to the Urban Institute’s analysis of Federal Reserve data. By 2010, whites were about six times as wealthy.

The dollar value of that gap has grown, as well. By the most recent data, the average white family had about $632,000 in wealth, versus $98,000 for black families and $110,000 for Hispanic families.

More at The Real News

This piece is cross-posted from Naked Capitalism with permission.

7 Responses to "Recession and Austerity Good for the Rich"

  1. dave   April 30, 2013 at 3:30 pm

    oh no feel bad white lib give your money to the man of color,after all its all your fault! or maybe just give him your wife,or daughter.

  2. benleet   May 1, 2013 at 10:10 am

    Average wealth is extremely misleading. The average, according to Survey of Consumer Finances, 2012, page 17, for 2010, is $498,000 for all 116 million households, and only 11% of households reach that amount. But the lower-saving 50% own 1.1% of all wealth, so their average is $11,000, while the higher-saving half average around $1 million and own 98.9% of all wealth. The median fell from $126,000 in 2007 to $77,300 in 2010, a drop of 39%. And Edward Wolff, scholar of wealth, places the median drop in wealth at 47%, down to below a 1969 level, a loss of over 40 years of savings for the median family or household. My blog, http://benL8.blogspot.com and the SCF site is http://www.federalreserve.gov/pubs/bulletin/2012/… target="_blank"&gt; <a href=

  3. Sonny   May 7, 2013 at 9:49 am

    Austerity and tight monetary policy favor the retired, who have fixed income and savings. Loose monetary policy, deficit spending, and inflation, will severely limit the retired from maintaining their standard of livnig. One who retires today, very comfortably on their savings, may be in desperate shape 10 years from now, due to inflation. Inflation and uncertainty is a very important consideration, by those preparing for retirement.

  4. Robert Patterson   May 7, 2013 at 1:40 pm

    What you seem to be saying is that nowadays, for a wealthy person, it is as good as it was to be wealthy in the depression. As the song says "The rich get richer and the poor get poorer. Ain't we got fun?"

  5. Michael Klein   May 8, 2013 at 9:45 pm

    "Behind every great fortune lies a great crime." H. Balzac

    The rich are not smarter, just dishonest and lucky.