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article imageUS households worth $500,000+ only ones recovering from recession

By Ken Hanly     Apr 30, 2013 in Lifestyle
Washington - Households with net worth of half a million or more have recovered from the recession. For most others, however, the recession is still continuing.
Those wealthier households increased their net worth since the recession by 21.2% whereas the rest of American households actually lost 4.9% of household wealth according to a study released by the Pew Research Center. The study covers the period from 2009 to 2011.The study attributes the disparity in the gains to the fact that stock and bond markets gained over the period and those investments were held mostly by more affluent households. On the other hand, many households whose main asset were their houses saw their value decline.
The top 13% of households have recovered losses from the recession ending in June 2009 but the rest of the country is losing out. Richard Fry, a senior research associate at Pew said: “The results are entirely sensible, but depressing. It’s a stark story of two Americas.” The average household net worth actually increased by 14% from 2009 to 2011 according to Census Bureau figures, but the increase was among wealthier households.
The Gini coefficient that measures income inequality has risen over the last generation. A zero coefficient would indicate equal sharing of income and one would be complete concentration the highest possible inequality. In 1967 the US coefficient was 0.397 but in 2011 it was 0.477 an increase of over 20%. The US figure is equivalent to that of China, Ecuador, or Madagascar. This growing inequality is now a permanent feature of the US economy according to a Brookings Institution study co-authored by Jason DeBacker an economist at Middle Tennessee State University.
The value of US government securities, municipal and corporate bonds owned by those households with net worth of more than half a million, rose 389% from 2009 to 2011. Tax-deferred 401(k) plans often helped wealthier households as well as they increased in value by 57%. On the other hand, real estate values plunged almost a third over the two year period. Richer households on average grow richer and poorer, poorer.
More about Pew research, US household income, US income inequality
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