Economic Recovery — But for Whom?
The comments above & below is an edited and abridged synopsis of an article by Econimica
The Fed’s policies have helped create record valuations in financial assets. These policies have resulted in a rise in household net worth, yet have created the fewest new full-time jobs and real income increases since WWII. And it is only a recovery for the wealthy; all the growth in household net worth has gone to the top 20% of income earners since 2007, while the remainder have seen declining net worth.
One way to detail the effect of this lopsided recovery is the record low US fertility rate. During the previous run-ups in household net worth, there was a parallel rise in the fertility rate as families felt more confident about expanding. The collapsing US fertility rate versus surging household net worth tells an illuminating story.
The Fed is protecting, enabling and rewarding a shrinking number for being asset holders while punishing the growing majority for having no assets, and ensuring the vast majority never will be asset owners as prices surge versus stagnant real wages. This is because a flawed economic model based on population growth (turning into consumer growth) has gone off track, because consumer class growth is collapsing.
Charts show that both the quantity and quality of under 65yr/old population growth, particularly now among the 55—64yr/old cadre is shrinking; this is shifting all population growth coming from the 65+ and 75+yr/old segments.
The article details household net worth as a percentage of disposable income; 2007—2016 mean net worth change by families’ income; US household net worth vs. US fertility; the US fertility rate vs. the Wilshire 5000; US 15+yr/old population growth; household income and expenditures by age groups; US 15+yr/old population growth; and North American 20—65yr/old population change
The Fed’s policies are protecting the wealthiest of Americans and punishing the other 80% that hold minimal assets. An aging population will prevent the US from getting out of this hole. Only a change from the current paradigms and removal of powers-that-be can save the bottom 80% from watching the American dream die.