How the rich got RICHER during the economic recovery – while the other 93 percent became worse off

  • Average net worth  of households in the upper 7 percent rose by an estimated 28 percent
  • Households in the  lower 93 percent dropped by 4 percent
  • Reason found:  Affluent households typically own stocks and other financial holdings that  increased in value
  • Less wealthy tend  to have more of their assets in their homes which haven’t rebounded in  value

By  Daily Mail Reporter

PUBLISHED: 12:32 EST, 24  April 2013 |  UPDATED: 13:24 EST, 24 April 2013

 

The richest Americans got richer during the  first two years of the economic recovery while the average net worth declined  for the other 93 percent of U.S. households, a report released on Tuesday  finds.

The upper 7 percent of households owned 63  percent of the nation’s total household wealth in 2011, up from 56 percent in  2009 according to the report from the Pew Research Center using last month’s  Census Bureau data.

The main reason for the widening wealth gap  is that affluent households typically own stocks and other financial holdings  that increased in value, according to the report.

Levels: The richest Americans saw a 28 percent rise in net wealth during the first two years of the economic recovery, as seen above, while the average net worth declined by 4 percent for the other 93 percent of U.S. households 

Levels: The richest Americans saw a 28 percent rise in  net wealth during the first two years of the economic recovery, as seen above,  while the average net worth declined by 4 percent for the other 93 percent of  U.S. households

Shared fall: Homes, cars, business and property values tumbled for all households regardless of their net worth, as seen here 

Shared fall: Homes, cars, business and property values  tumbled for all households regardless of their net worth, as seen here

On the other hand, the less wealthy tend to  have more of their assets in their homes, which haven’t rebounded from the  plunge in home values.

‘Among households with net worth of less than  $500,000, just 33% of their wealth comes from financial assets and 50% comes  from their home,’ thereport  stated of the  differences.

The findings is the latest to point up  financial inequality that has been growing among Americans for decades, a  development that helped fuel the Occupy Wall Street protests.

A September Census Bureau report on income  found that the highest-earning 20 percent of households earned more than half of  all income the previous year, the biggest share in records kept since 1967.

Raise: The overall wealth of American households rose by $5 trillion, or 14 percent, with that wealth being the sum of all assets such as a home, car and stocks, minus the sum of all debts 

Raise: The overall wealth of American households rose by  $5 trillion, or 14 percent, with that wealth being the sum of all assets such as  a home, car and stocks, minus the sum of all debts

A 2011 Congressional Budget Office report  said incomes for the richest 1 percent soared 275 percent between 1979 and 2007  while increasing just under 40 percent for the middle 60 percent of  Americans.

AMERICANS UPS AND DOWNS:

  • Overall wealth of American households rose  by $5 trillion, or 14 percent
  • Average net worth of households in the upper  7 percent of the wealth distribution rose by an estimated 28 percent:  $2.5 million to an estimated $3.2  million
  • Those upper 7 percent were the households  with a net worth above $836,033
  • Households in the lower 93 percent dropped  by 4 percent: $140,000 to roughly $134,000

Other details of Tuesday’s report found that  the overall wealth of American households rose by $5 trillion, or 14 percent,  during the period to $40.2 trillion in 2011 from $35.2 trillion in 2009 –  household wealth being the sum of all assets such as a home, car and stocks,  minus the sum of all debts.

The average net worth of households in the  upper 7 percent of the wealth distribution also rose by an estimated 28 percent,  while that of households in the lower 93 percent dropped by 4 percent.

That is, the mean wealth of the 8 million  households in the more affluent group rose to an estimated $3.2 million from an  estimated $2.5 million while that of the 111 million households in the less  affluent group fell to roughly $134,000 from $140,000.

The upper 7 percent were the households with  a net worth above $836,033. The 93 percent represented households whose worth  was at or below that.

Not all households among the 93 percent saw a  decline in net worth, but the average amount declined for that  group.

On an individual household basis, the average  wealth of households in the more affluent group was almost 24 times that of  those in the less affluent group in 2011. At the start of the recovery in 2009,  that ratio was less than 18 to 1.

During the study period, Standard &  Poor’s 500 stock index rose by 34 percent, while the Standard &  Poor’s/Case-Shiller index for home prices fell by 5 percent.

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