Percent of Total Wealth Owned in the United States: Bottom 40% control -0.9% Meaning Close to Half the Country has a Negative Net Worth.

Wealth is an important measure of financial stability and success.  Being able to have enough set aside for a rainy day can make the difference between weathering a minor storm to being in full upheaval because of an unexpected expense.  Most Americans however live paycheck to paycheck.  There is no emergency fund.  It is troubling to see new data looking at the distribution of wealth in the United States because many Americans actually have a negative net worth.  New data looking at wealth distribution highlights a growing gulf between Americans.  Wealth inequality like that seen during the Gilded Age and the Roaring 20s led to massive disequilibrium that ended up in deep financial corrections.  We are very much in a situation that rivals that period only this time the public is able to go into negative net worth territory through items like college loans, auto debt, and credit cards.  The percent of total wealth owned in the United States might surprise you.

Wealth in the United States

Wealth inequality is at record levels in the United States.  Most people don’t have a clue as to the percentage breakdown of wealth owned in the country.  New data released highlights a troubling scenario where the bottom 40 percent of Americans are actually in a negative net worth situation.

Take a look at the wealth breakdown here:

percenttotalwealth

Source:  Harvard Gazette

“(Harvard Gazette) The details show that real wages for most U.S. workers have been relatively stagnant since the 1970s, while those for the top 1 percent have increased 156 percent, and those for the top 0.1 percent have increased 362 percent, according to a report by the Economic Policy Institute.

Those trends resulted in the poorest 20 percent of Americans receiving just 3.6 percent of the national income in 2014, down from 5.7 percent in 1974. The upper 20 percent, meanwhile, received nearly half of U.S. income in 2014, up from about 40 percent in 1974, according to Census Bureau statistics.”

This is what happens when wage growth disappears and inflation continues to expand.  To keep up the pretense that the middle class was thriving debt products allowed people to spend money they don’t have.  This is how the bottom 40 percent of Americans actually own negative wealth.  They simply have more debt than assets.

The story of the last financial crisis was one of too much debt.  As it happens, we have now surpassed that point once again:

US-household-debt-2000-2015-Q3

The economy has been revived by more debt in the form of college loans, auto debt (subprime as well), housing debt, and credit card debt.  All of these debt sectors are up.  What the new data on wealth distribution highlights is that most of the wealth is controlled by the top 20 percent (88.9 percent of all U.S. wealth).  The distribution is getting more heavily tilted.

Many people realize that debt is not wealth but many don’t make the distinction.  If you buy a $30,000 car and finance the entire purchase, after one year it is likely that you will owe more on the car than it is worth.  Forget about the financing charges going to the lender.  Or taking on too much student loan debt.  These are all ways many people fall into a negative net worth trap.  In the end, the wealth distribution highlights one glaring fact: those at the top are controlling more and more wealth and we have also seen the middle class now become a minority.

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5 Comments on this post

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  1. Rufus T Firefly said:

    How much money do you have to have to belong to the top 20%, second 20%, third 20% or bottom 40%?

    February 18th, 2016 at 5:06 am
  2. Shorebreak said:

    This has been the case for a number of years now. “In the United States, wealth is highly concentrated in a relatively few hands. As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers).”
    http://www2.ucsc.edu/whorulesamerica/power/wealth.html

    February 18th, 2016 at 7:30 am
  3. Opiner said:

    I heard someone say on C-Span this morning that the House of Representatives have been controlled by Republicans for 17 of the last 21 years.

    I did some research to check this out. He was right! Party Divisions of Congress. https://en.wikipedia.org/wiki/Party_divisions_of_United_States_Congresses
    https://upload.wikimedia.org/wikipedia/commons/8/85/Congress-Graph.png
    http://www.washingtonpost.com/news/the-fix/wp/2014/09/08/the-partisan-history-of-every-u-s-senate-seat-in-1-awesome-chart/

    Remember, Congress (Senators and House of Representatives) make the laws for the country, not the President ,
    https://en.wikipedia.org/wiki/Powers_of_the_President_of_the_United_States
    https://www.whitehouse.gov/1600/executive-branch .

    The Executive Branch. From 1975 to 2015, Senate Control (Number of Years in Power) Republican 13 out of 21, Democratic 6 out of 21, Republicans and Democrats Tied 2 years.
    House Control Republican 17 out of 21, Democrat 4 out of 21

    Republicans have been in control of the country for the Most of the last 21 years. No wonder the separation of income has climbed so much.

    It’s the US Senator and House of Representative elections that we really need to pay attention to if we want change.

    I’ve heard 80 Percent of the States are presently under Republican control. I have yet to check this.

    February 21st, 2016 at 8:29 am
  4. Rufus T Firefly said:

    Democrats have ruled the White House for 16 of the last 24 years. The President signs or vetoes a bill and enforces the law. Income inequality is very high in Democratic controlled cities such as New York, Chicago and San Francisco.

    In other words, both are responsible.

    February 23rd, 2016 at 8:07 am
  5. OBloodyHell said:

    Inequity comes from irresponsibly spending your income.

    Americans have few assets because they don’t understand anything about personal finance and how to bootstrap yourself.

    And this “Blame X!!!” bovine excreta is one of the chief problems, because as long as people don’t look at their own bad spending habits, they aren’t about to change this.

    You can thank the modern “edumacashinal” system for this. Too busy handing out awards for attendance and not actually teaching anyone anything in the classes.

    March 12th, 2016 at 10:16 pm

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