July 2, 2019
This week, the longest U.S. economic expansion in history entered its record-setting 121st month. The remarkable recovery and growth since the Great Recession isn’t raising the tide for all boats, it appears. While extreme wealth has arrived for some, there’s also an ever-widening gap between the haves and have nots.
UBS says the ranks of U.S. billionaires more than doubled in the last decade, from 267 in 2008 to 607 last year. UBS Global Wealth Management’s John Mathews, Head of Private Wealth Management and Ultra High Net Worth, told Reuters, “The rich have gotten richer and they’ve gotten richer faster. The drive or the desire for consumption has just gone upscale.”
A new class of unfathomably rich has emerged, and then there’s everyone else. The billionaire class is accumulating wealth, as well as a wide array of collectibles ranging from prized guitars from Pink Floyd front man David Gilmour’s collection, to Claude Monet’s “Meules,” which sold at Sotheby’s for $110.7 million, the most ever for an Impressionist painting. It isn’t difficult to see the signs of a new Gilded Age, either.
Even on the corporate front, mergers and acquisitions are growing larger, while the wealthy buy everything from luxury penthouses and sports teams to yachts and excursions to the moon.
Yet, at lower-income levels it is an entirely different situation. Data from the Federal Reserve through 2016 shows the wealthiest fifth of Americans hold 88% of the country’s wealth. That disparity is reflected in the number of people receiving federal food stamps, now at 39 million. While that is still below the peak reached in 2013, it has grown 40% since 2008, despite the fact the U.S. population has grown roughly 8%.
Rising prices have followed the expansion, too. Everything from restaurants, college tuition and stocks, to healthcare and housing costs are soaring. That, in turn, has fueled a housing and homelessness crisis in communities across the country. And it has left many Americans feeling as though boom times never arrived.
Federal Reserve Chairman Jerome Powell said last week, “The benefits of this long recovery are now reaching these communities to a degree that has not been felt for many years. Many people who in the past struggled to stay in the workforce are now getting an opportunity to add new and better chapters to their life stories. All of this underscores how important it is to sustain this expansion.”
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