Opinion | The Wealth Gap Shrinks
The three years before the pandemic saw big gains for lower earners.
www.wsj.com
I noticed this is now behind a pay wall so here are some highlights:
Note: I changed the title so more people can realize how well the economy was doing pre-covid.
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Lo, “families at the top of the income and wealth distributions experienced very little, if any, growth” in net worth between 2016 and 2019 “after experiencing large gains between 2013 and 2016,” while “families near the bottom of the income and wealth distributions generally continued to experience substantial gains.” That’s a long way of saying wealth inequality declined.
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The Fed also reports growing wealth among lower-income Americans. Net worth (assets minus debt) increased 32.5% among the lowest income quintile and 30.7% among the second lowest, while declining modestly for the upper crust. The latter may be due to older Americans with more financial assets shifting to bonds from equities as they near retirement. Net worth also increased among blacks (32.1%) and Hispanics (63.6%) compared to whites (4%).
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Rising incomes also made home ownership more affordable, even with tighter mortgage underwriting. Home ownership declined across the socioeconomic spectrum during the Obama Presidency despite near-zero interest rates, but it ticked up 1.4 percentage points overall from 2016 to 2019, including among Hispanics (1.8 points) and blacks (2.3 points).
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As significant was the growth in business equity, especially among blacks (138%), Hispanics (63%) and Americans without a high-school diploma (104%). The gig economy and online platforms like
Etsy
have made starting a business easier, but so have the Trump Administration’s deregulation and the 2017 tax reform.
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