From Yahoo Finance
The middle class is even worse off than the numbers show
By Rick Newman
Mon, Jun 9, 2014
The "average" American worker earns about $44,000 per year and saves around 4% of his income. And the "average" household has a net worth of approximately $710,000, including the value of homes, investments, bank accounts and so on. But many Americans, needless to say, fall well below those benchmarks, which fail to capture widespread financial distress.
The gargantuan fortunes of the rich have become a cause célèbre scrutinized by, among others, French economist Thomas Piketty in his surprise bestseller, Capital in the 21st Century. Now, the growing gap between the rich and the rest may be distorting numbers long used to gauge the health of the middle class.
The rich have always skewed wealth and income data to some extent, since they pull up averages and make ordinary people seem a bit better off than they really are. But the outsized gains of the super-rich during the past 25 years have become so disproportionate that some measures of prosperity may be losing their relevance. “When wealth and income are as concentrated as they are, examining the ‘average’ consumer or ‘average’ investor makes little sense,” economists at Bank of America Merrill Lynch wrote in a recent report.
Americans falling behind
This may help explain why the economy seems to be gaining strength — on paper — yet millions of ordinary people feel like they’re falling behind. Americans’ total net worth, for instance, recently hit a new high of $81.8 trillion, thanks to a five-year stock market rally and the gradual restoration of home equity lost during a six-year housing bust. Yet consumer spending remains tepid, home buyers seem to be hibernating and an alarming portion of adults aren’t even looking for work. Polls show widespread pessimism that’s out of sync with an economy supposedly heading into its fifth year of expansion.
Read more from Yahoo Finance >>
The middle class is even worse off than the numbers show
By Rick Newman
Mon, Jun 9, 2014
The "average" American worker earns about $44,000 per year and saves around 4% of his income. And the "average" household has a net worth of approximately $710,000, including the value of homes, investments, bank accounts and so on. But many Americans, needless to say, fall well below those benchmarks, which fail to capture widespread financial distress.
The gargantuan fortunes of the rich have become a cause célèbre scrutinized by, among others, French economist Thomas Piketty in his surprise bestseller, Capital in the 21st Century. Now, the growing gap between the rich and the rest may be distorting numbers long used to gauge the health of the middle class.
The rich have always skewed wealth and income data to some extent, since they pull up averages and make ordinary people seem a bit better off than they really are. But the outsized gains of the super-rich during the past 25 years have become so disproportionate that some measures of prosperity may be losing their relevance. “When wealth and income are as concentrated as they are, examining the ‘average’ consumer or ‘average’ investor makes little sense,” economists at Bank of America Merrill Lynch wrote in a recent report.
Americans falling behind
This may help explain why the economy seems to be gaining strength — on paper — yet millions of ordinary people feel like they’re falling behind. Americans’ total net worth, for instance, recently hit a new high of $81.8 trillion, thanks to a five-year stock market rally and the gradual restoration of home equity lost during a six-year housing bust. Yet consumer spending remains tepid, home buyers seem to be hibernating and an alarming portion of adults aren’t even looking for work. Polls show widespread pessimism that’s out of sync with an economy supposedly heading into its fifth year of expansion.
Read more from Yahoo Finance >>
