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Banned
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Originally Posted by Charlatan
Perhaps I am confused but the suggestion that a small percentage control nearly all of the wealth and this is a problem, seems to suggest that there is a limited amount of wealth (i.e. no further wealth can be generated).
Can I get some clarity on this please?
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This is a recent study, and it is consistent with data covering all US age groups. I predict that the response will be that "they are young", and the fact will be ignored or downplayed,that the gains in income and wealth accumulation are confined to the top 20 percent, as every other set of data also indicates.
Why does it matter if total wealth is increasing? It is, and it mostly goes to where it is already concentrated, and none of the increase reaches the bottom 20 percent, at all.
Quote:
http://209.85.165.104/search?q=cache...lnk&cd=3&gl=us
SAVINGS AND ASSET ACCUMULATION
AMONG AMERICANS 25-34
BY Christopher Thornberg and Jon Haveman
October 13, 2006
Prepared for:
The American Institute of Certified Public Accountants
BY Christopher Thornberg and Jon Haveman
October 13, 2006
Prepared for:
The American Institute of Certified Public Accountants
Page 2
The proportion of this population that possesses a savings account or other fi-
nancial assets has declined significantly, as has median net worth.
<h3>Between 1985 and 2004, net worth grew almost 20 percent for those in the top quintile of
the wealth distribution and fell for the other 80 percent. This decline was most pro-
nounced for those in the bottom 20 percent of the distribution.</h3>
Page 4
Not all Americans have bene-
fited equally from the current
gains in the economy. Income
inequality is at its highest level
since World War II. Those at the
top of the income distribution
have enjoyed a pace of growth
in incomes that is about 2.5
times that of those at the bot-
tom end.
Page 9
The forces of asset appreciation have had a significant impact on the bottom line for
Americans over the past decade despite low savings rates. In the late 1960s, net house-
hold wealth was about 5 times annual disposable income. It dropped slightly in the
1970s on the back of weaker-than-average economic performance and a slowdown in
productivity gains. However, the past decade has seen a sharp rise in net wealth, up to
5.5 times current disposable income.
This increase in wealth is due to a number of factors. One is the increase in the values in
U.S. equity markets; the other is the rapid run up of real estate prices. Unfortunately, the
rise in average wealth disguises the fact that the majority of new wealth is accruing to
older, higher income households. A numerical majority of Americans have not seen any
significant change in their net worth position over the past decade.
The current value of net wealth in the United States equals about $170,000 per person if
excess real estate values are excluded. In other words, it is only about 80 percent of the
current public shortfall, and this is without accounting for using asset withdrawal for
future current spending, which is the primary reason for asset accumulation!
The Geography of Asset Accumulation Page 16
Net worth in the United States is not evenly distributed (Figure 5). In 1985, nearly two-
thirds of Americans aged 25-34 owned one or another form of savings account (Figure
6). At that time, young Americans in New England had the highest ownership of such
accounts, with 80 percent reporting that they had them.
The least likely to hold such an account were those in the East South Central region.
7
In
the subsequent 19 years, however, ownership of savings instruments declined in all but
the West North Central region. The East South Central region not only had the lowest
ownership rate in 1985, but experienced a 15 percentage point decline between 1985 and
2004, the largest of any region.
Figure 5. Median Net Worth Among Americans 25-34, by U.S. Region
(Darker colors indicate greater n
Net worth in the United States is not evenly distributed (Figure 5). In 1985, nearly two-
thirds of Americans aged 25-34 owned one or another form of savings account (Figure
6). At that time, young Americans in New England had the highest ownership of such
accounts, with 80 percent reporting that they had them.
The least likely to hold such an account were those in the East South Central region.
7
In the subsequent 19 years, however, ownership of savings instruments declined in all but
the West North Central region. The East South Central region not only had the lowest
ownership rate in 1985, but experienced a 15 percentage point decline between 1985 and
2004, the largest of any region.
The nationwide decline in median net worth represents an increasing concentration of
net worth among the wealthiest individuals rather than a decline in the aggregate net
worth of those aged 25 to 34. In 1985, the top half of the wealth distribution accounted
for 102 percent of all wealth held by this group. By 2004, this had increased to 113 per-
cent.
This trend holds true for each of the 9 regions discussed here. In 7 of the 9 regions, the
richest 50 percent are responsible for more than 112 percent of the net asset accumula-
tion in the region. On average, this leaves the bottom half of the wealth distribution
with negative net worth.
Only in the New England and Pacific regions do the top half of the wealth distribution
hold a smaller proportion; both are under 109 percent. This concentration was most ex-
treme in the East South Central region, with the top half holding 129 percent of the net
worth in the region compared with only 98 percent in 1985.
In general, the top half of the distribution held between 110 and 116 percent in 2004
while it held less than 106 percent in all regions in 1985.
As was the case nationally, changes in unsecured debt, home equity, and demographics
are an important part of the regional disparities. The concentration of unsecured debt
among low-wealth individuals increased in every region while their share of home eq-
uity fell in all but the West North Central Region (Table 5). The increase in unsecured
debt among low-wealth individuals was particularly strong in the East South Central
and New England regions. In the East South Central region, low-wealth individuals ac-
count for 86 percent of the unsecured debt. Shares of home equity did not change mark-
edly between 1985 and 2004, but the change was either 0 or negative in every region.
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There is a heavy emphasis on declining numbers of savings accounts. Where would the money come from for the masses to deposit in the bank. The money is not reaching them and the costs of basics...housing, food, transportation have risen dramatically since 2001.
Last edited by host; 12-03-2007 at 12:28 AM..
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