A Simple Picture of Inequality

September 4th, 2014 at 3:28 pm

The Federal Reserve’s Survey of Consumer Finance (SCF) findings for 2013 are just out. It will take a bit to absorb them all—this is a rich data set with data not just on income, but on wealth as well, including debt. That makes it a key source for information on household net worth.

But I was initially struck by two figures from the report. The first one below is for income, and shows changes in real mean and median income over two periods, 2007-10, basically the Great Recession, and 2010-13, the first few years of recovery.

scf1_13

Unsurprisingly, both measures fell hard in the recession, as income losses occurred throughout the scale. But over the recovery, mean income rose about 4% while the median fell by 5%. That’s a very familiar pattern in a period of unequal gains.

In fact, the mean income of the bottom fifth of households fell 4% while that of the richest fifth rose 6% (and the income of the top tenth rose by 10%). So, here’s yet another indicator of where the growth is going.

Turning briefly to net worth—like I said, I’ll have more to say about this later—real median net worth took a big hit in the downturn and has yet to start climbing back. It’s down 30% since 2001, and 40% off its 2007 peak.

scf2_13

Source: SCF

Not pretty pictures, I know. But if you want to understand a) the extent to which inequality is reasserting itself since the downturn, and b) the losses in wealth to middle-class families (and perhaps why many still feel pretty damn grumpy), you’ve got to look at them.

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One comment in reply to "A Simple Picture of Inequality"

  1. Robert buttons says:

    Just look at Piketty’s work. He documents a massive upswing in inequality since the beginning of the second financialization (viz. Nixons ending Bretton Woods). Piketty himself said the printed money is not reaching the right people. Of course the fed is documentating an increase in inequality —they create it.


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