Wealth gap widening in US: Fed

The gap between the richest Americans and the rest of the nation has widened after the recession, highlighting the worsening income inequality in the United States.

A new survey released by the US Federal Reserve on Thursday found that gains in income have been far from uniform, with those making the most doing significantly better than everyone else.

The Fed report found “substantial disparities in the evolution of income and net worth” since 2010.

Those at the bottom of the scale continue to see their real incomes shrink while the middle class see little change.

Average, or mean, pretax income for the wealthiest 10 percent of US families rose 10 percent in 2013 from 2010, but families in the bottom 40 percent saw their average inflation-adjusted income decline over the same period, according to the Fed’s Survey of Consumer Finances, which is conducted every three years.

Interestingly, the survey confirms that wealth is concentrated among a small number of ultra-rich Americans with the top three percent holing more than half of the nation’s net worth.

The top three percent of American families control 54.4 percent of all wealth in the US. The number is up from 51.8 percent in 2007 and 44.8 percent in 1989.

From 2010 to 2013, US families gained about 4 percent raise in their income, accounting for inflation, while the top three percent accounted for 30.5 percent of all income, up from 27.7 percent in 2010.

Middle-class and upper-middle class families who “failed to recover the losses experienced between 2007 and 2010” remained mostly unchanged.

The report also showed the lowest homeownership rate since 1995. About 65 percent of families owned their primary residence in 2013.

“What disturbs me about this recovery, which has been the weakest in 50 years, is how feeble it has been, and we’ve been asking what are the reasons behind it,” said Beth Ann Bovino, chief US economist at Standard Poor’s (SP), earlier in August on a report on wealth gap.

“From my research and some of the analysis I saw from others, when you have extreme levels of inequality, it can hurt the economy,” the economist added.

AN/HRJ