New Orleans Looking at the soaring stock market and the touts’ claims of an improving housing market and corporate profitability, I would have hoped that what I call “citizen wealth” or the average family’s overall income security would have also come back strong. So far, not so much.
A big part of the problem in this recovery is plain and simple inequality. The Federal Reserve in Washington estimates that Americans as a whole have regained 91% of the $16 trillion that we lost from the 2007 to 2009, but the Federal Reserve Bank in St. Louis has also found in a recent report that the “typical household” has “regained only half of its wealth.” The average American family in 2013 is only 45% as financially secure as they were in 2007. Part of the problem is that a lot of what I might call that “statistical security” is based on the rising numbers that come from stock market speculation. In fact two-thirds of the citizen wealth recovery since 2009 according to the St. Louis fed is due to rising stock prices. And, as Christopher Rugaber of the Associated Press notes, “Those gains disproportionately benefit affluent households: about 80 percent of stocks are held by the wealthiest 10 percent of the population.”
As I pointed out in my book, Citizen Wealth, for average families of low-and-moderate income much of what we have for income security is held in our homes and the amount of the mortgage that is paid off to the bank. Home prices around the country are still 30% of what they were in 2007, and the weird codependency of bankers and the Obama Administration that allowed them to resist modifications for home owners facing foreclosures has prolonged and perhaps indefinitely postponed any recovery for most of us.
You get an idea how stratified class is becoming in America when you look at average household net worth. First think about where you stand once you add up your house, if you have one, the age of your car, the slimness of your savings account, and what not. Then, sit down as you take this in. The average household at the end of 2012 had a net worth after all of your debts and loan payments of $539500, making most American households semi-millionaires. Good news might be that that was up more than a hundred grand from the $469,000 in 2009 in the doldrums of the recession, but still down by a hundred grand from the $641,000 where the average sat when the bell rang on the spring of 2007 before the collapse.
If you are scratching your head and saying, hey, Wade, is that really the average, because here’s all I have, then you have finally come to grip with two things: one, how precarious your own citizen wealth is, and, secondly, how rich the super-rich and their gang are to be able to amass so much that they can pull the average up so high over your head. When you look at the ceiling over your head, you’re wondering how much rain may come in. When they look at the ceiling, they are seeing nothing but blue sky, baby!