During a period of lavish U.S. Federal Reserve quantitative easing, only the wealthy experienced economic benefit, a new study from the Fed showed.
Fed stimulus: Wealthiest population US income rise to 30.5%
The Fed study from 2010 to 2013, first reported by Bloomberg, shows that the wealthiest 3 percent of the population saw their share of total US income rise to 30.5 percent, up from this group taking 27.7 percent of all income in 2010.
While the wealthy were taking a larger percentage of total income, the median income for all families dropped 5 percent from 2010 to 2013. Such findings are “consistent with increasing income concentration during this period,” the report revealed.
Median net worth fell 2 percent to $81,200 from 2010 to 2013, the report observed, revealing “substantial disparities in the evolution of income and net worth.”
The percentage of the general population with retirement accounts decreased 1.2 percentage points to 49.2 percent during the three years ended 2013, a decline that was most prevalent among the bottom half of income distribution, the report noted.
Fed stimulus: Consumer finances has become increasingly stratified
The improvement among primarily the wealthiest Americans under stimulus, a phenomenon that largely didn’t assist middle and lower classes, is a charge made by forces on both the political right and left that now has meet on the bone. “Consumer finances has become increasingly stratified during the recovery, thanks in part to gains in the stock and housing markets that have been boosted by the Fed’s unprecedented stimulus,” the Bloomberg report noted. “Meanwhile the labor market has been slower to progress, with wages remaining stagnant for many workers, aggravating the disparity in income.”
During the Fed’s artificial stimulus those with deep portfolios owning stocks and assets such as homes have seen their wealth multiply under stimulus, the report noted. Stocks as measured by the Standard & Poor’s 500 Index rose in value by 47 percent in the last three years ended December 2013. While the S&P/Case Shiller index of property values climbed 13.4 percent in the same time period, real estate prices in higher end communities prized by the wealthy grew even more.
On a positive note, credit card debt is lower. The median family credit card balance was $2,300 last year, dropping from $2,800 in 2010. However, reducing consumer debt at the expense of consumer spending might be going in the wrong direction. As ValueWalk noted in a report yesterday, the U.S. Federal Reserve labeled those who save money rather than spending it on discretionary items was “hoarding.”
See full report in PDF format here.