Unwealthy in America: New study finds that Top 1 percent hold 37 percent of nation’s wealth. A quarter of US families feel they are under economic stress caused by the Great Recession.
Wealth matters. Saving and investing are the cornerstone to having a long-term successful future. Yet for most Americans, the ability to gather and save wealth is slipping through their fingers like sand through an hourglass. A new study finds that the top one percent actually hold more wealth than we once thought. Why? First, there is underreporting and also, for the ultra-wealthy tax shelters and income sources are diverse making it harder to track. This isn’t your typical W-2 worker household. This data is transparent. A new study looking at Forbes information and other figures found that in the US, the top one percent hold a stunning 37 percent of all wealth available. This is 3 percent higher than previous data. We can also look at income figures and find that for the lower 80 percent of this nation, household income growth has been stagnant for more than a generation. Wealth inequality is going to happen but when things get this disjointed, you start seeing cracks in the system. For example, many retailers are finding tougher times ahead while ultra-luxury stores are doing exceptionally well since the top slice of the pie is grabbing a hold of more wealth. How else can you have a year where the stock market reaches a peak while 47 million Americans are on food stamps, another record that shouldn’t carry any pride with it? Let us take a look at wealth in America.
16 million Americans have dropped out of the labor force in the last 10 years: The growth of long-term unemployment, low wage labor, and distorted employment figures.
The unemployment rate is looking much better than it should because we have a very large number of Americans that have dropped out of the labor force. How many? In the last 10 years 16.2 million Americans have dropped out of the labor force. The total number of Americans not in the labor force is over 92 million. What is more surprising is that most of the jump in the last 10 years occurred once the recession was labeled as being officially over. When you eliminate counting a large pool of your population, it is easy to understand why the unemployment rate appears to be so low. However the nation is largely shifting to one of low wage labor. Corporate profits are being bolstered by massive slack in the employment markets and the shifting of benefits from corporations to employees. This has been incredibly difficult for middle class families that are witnessing inflation and their purchasing power decline. It might be useful to examine where our employment situation now sits given that we are now half a decade into this so-called recovery.
China ghost cities and real estate correction: China’s GDP and individual household wealth is heavily tied to real estate. What happens when a correction hits?
China has had one of the wildest real estate sectors of any large global economy. Chinese real estate values have appreciated dramatically largely shutting out regular workers in the country. It is an interesting situation. You hear countless stories of young males trying to find a potential mate and given the restrictive one child policy, many eligible bachelorettes are looking out for those that actually own property. Nothing wrong with that but it adds fuel to the real estate flames in China. The flames are now cooling down. China’s real estate market has started to cool for the first time in many years. This will be challenging for the economy because a massive part of Chinese GDP is tied directly to real estate. We have many examples of ghost cities and ghost apartments sitting virtually empty but somehow, added to the GDP figures. It is also important to note that in China, a large portion of household wealth is tied up in one asset, real estate. Chinese stock exchanges do not reflect the massive growth of the country, fudge factors aside. So what actually happens when real estate contracts in China?
Collection nation: One out of three consumers have debts in collection over the past year. A total of 77 million Americans are having problems managing their debt. 22 million consumers have zero credit.
A recent report by the Urban Institute and Encore Capital Group’s Consumer Credit Research Institute has found some rather startling news about consumer debt in the United States. Over one third of consumers had some sort of debt in collection over the past year. Of course this coincides with the struggling employment growth that many are facing or the stagnant wages families are encountering. For a nation so reliant on debt, this is a big problem. Many people mistake access to debt as some form of wealth. Many working class families go deeper into debt to keep up the pretense that they are securely in the middle class when in fact, inflation is simply eroding their purchasing power. The data also shows that Americans are juggling a multitude of debt from mortgages, student loans, credit cards, auto loans, and other debt that once was rare. Now it would seem that debt is simply a way to keep buying things one cannot afford. So what does it say when 77 million Americans are having a tough time staying current on their debt payments?