The US government has been redistributing income from the 99 to the 1 percent for the last thirty-five years. The result of this government created income and wealth inequality has been an economy far weaker in virtually all measurements than any of the last century. That’s because the underlying economic factors have been weakened.
According to a study by the Pew Charitable Trust,
“Although income and earnings have increased over the past 30 years, they have changed little in the past decade. The typical worker had wage growth of 22 percent between 1979 and 1999 but just 2 percent from 1999 to 2009. (This is not in inflation adjusted wages, in which case, wages would’ve been stagnant or declining over the last thirty-five years).
• The Great Recession eroded 20 years of consumption growth, pushing spending back to 1990 levels. Over the 22 years before the start of the downturn, household expenditures grew by 16 percent. But households tightened their purse strings after the start of the recession in 2007, and spending has yet to recover. As a result, the net increase in average annual household spending is just 2 percent since 1990. That’s despite twenty-six years of inflation growth.
• The majority of American households (55 percent) are savings-limited, meaning they can replace less than one month of their income through liquid savings. Low-income families are particularly unprepared for emergencies: The typical household at the bottom of the income ladder has the equivalent of less than two weeks’ worth of income in checking and savings accounts and cash at home.
• Even when pooling all of its resources—including from accounts that are potentially costly to access, such as retirement accounts and investments—the typical middle-income household can replace only about four months of lost income.
• Most families face financial strain across all balance sheet elements: income, expenditures, and wealth. In addition to being savings-limited, households face other financial challenges; just under half of families are “income-constrained,” reporting household spending greater than or equal to their income; and 8 percent are “debt-challenged,” with payments equal to 41 percent or more of their gross monthly income. Fully 70 percent of households face at least one of these problems, with many confronting two or even all three.