Why aren’t the impressive increases in wealth helping the economy bounce back as briskly as it normally does four years after a recession? Economists cite several reasons. The biggest gains aren’t going to the vast majority of Americans. Many families are still nursing big losses on the value of their home, and the big drop in home prices from 2006 through 2011 has undermined their confidence. Moreover, their incomes have been crimped by a weak labor market and tax hikes that took effect in January. The biggest gains in wealth are going to wealthy households that tend to save a big chunk of their incomes and spend a smaller proportion on basics such as food and clothing. “Those guys don’t spend much,” says economist Edward Wolff of New York University. The disparity shows up in numbers Wolff calculated. He found that the average U.S. household’s net worth rose this year to $522,000. But the average is skewed higher by the vast net worth of America’s wealthiest — Bill Gates’ $67 billion, for instance, according to Forbes magazine.
Posted on: Sat, 22 Jun 2013 19:13:12 +0000
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