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April 23, 2013

Our Unequal Recovery

From the WSJ:
Only Richest 7% Saw Wealth Gains From 2009 to 2011, by Neil Shah: ... From 2009 to 2011, the average wealth of America’s richest 7% — the 8 million households with a net worth north of about $800,000 — rose nearly 30% to $3.2 million from $2.5 million, according to a Pew Research Center report... By contrast, the average wealth of America’s remaining 93%, some 111 million households, actually dropped by 4% to $134,000 from $140,000. ...
The findings show that America’s economic recovery has been not just sluggish, but painfully uneven in its benefits. Rallying stock and bond markets have boosted the wealth of America’s most affluent... The upper 7% of households held 63% of the nation’s wealth at the end of 2011, up from 56% in 2009.
As the article notes, "the one-sidedness of the U.S.’s recovery ... has been supported by low-interest-rate policies from the Federal Reserve that have helped push asset prices higher."
One of the things we need to think a lot harder about is how to improve the distributional effects of monetary policy. I'd feel better about taking care of the top 7 percent if it had somehow trickled down to more jobs for struggling households, or if we had used fiscal policy to address the unemployment problem to a far greater degree than we did.

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