The President’s remarks at the recent State of the Union aroused my curiosity:
Since my election, the net worth of the bottom half of wage earners has increased by 47 percent — three times faster than the increase for the top 1 percent.
This prompted the following questions:
- So, what is the average net worth of the bottom 50% of Americans?
- How has the average net worth of the bottom 50% changed over time, adjusted for inflation, starting around 1970?
- For extra bonus points, can you compare that to data on the top 1%?
This sounds like it would make a good story for The Indicator from Planet Money.
WASHINGTON (Reuters) – U.S. President Donald Trump rolled out an eye-catching statistic in his State of the Union address Tuesday: the wealth held by the poorest half of American households increased three times as fast as the wealth held by the “1%” since he became president.
That’s true, according to Federal Reserve data.
On average, Americans have seen a 17% jump in household wealth since Trump’s election, while wealth at the bottom half has increased 54%.
“This is a blue collar boom,” Trump also said Tuesday. That’s less apparent. The biggest winners on a dollar basis were a familiar group – whites, college graduates, and people born during the “baby boom” between 1946 and 1964.
Since December 2016, President Barack Obama’s last full month in office, aggregate household wealth has increased by $15.8 trillion, but the vast majority went to groups that have tended to accumulate wealth in the past.
Even with a 54% increase in their household wealth under Trump, the poorest half of American households, around 64 million families, still have just 1.6% of household “net worth.”
HALF OF AMERICA
Net worth combines the value of assets like real estate and stocks and subtracts liabilities like mortgage loans and credit card balances.
Because America’s bottom 50% are starting from such a small base, given the enormous disparities in wealth in the United States, even large moves in their fortunes do little to dent the overall distribution. In dollar terms as of the end of September 2019, that latest data available from the Fed, the combined net worth of the poorest half of families was $1.67 trillion out of total U.S. household wealth of $107 trillion.
Here is what the Fed’s Distributional Financial Accounts have to say:
Historically, 17% growth in household wealth over 11 three-month “quarters,” or nearly three years, is pretty standard. There have been 110 such periods since the Fed’s data series begins in mid-1989, and the most recent ranks 55th, squarely in the middle.
On a quarterly basis, compound growth in household wealth since 1989 has averaged 1.39%. Under Trump it is slightly less, at 1.34%.
The bottom half of households saw their net worth rise by 54% under Trump, from $1.08 trillion to $1.67 trillion. That’s compared to an 18% rise for the top 1%, who control roughly a third of the total household wealth in America, or around $34.5 trillion.
Even after those gains, that works out to average net worth of around $26,000 for the bottom half of households versus around $27 million for the ones at the top.
Much of that increase among the bottom half was due to increases in real estate, not stocks, after a resurgence in home ownership rates that began in 2016.
Wages for lower-skilled jobs have of late been rising faster than those for higher-skilled occupations. January non-farm payrolls data show a bigger-than-expected jump in overall employment, bolstered by an increase in construction jobs.
But it takes time for income to be saved and translate into wealth. Since Trump took office, households headed by a college graduate captured 75% of the net worth gains, or around $11.88 trillion.
They represent about a third of all households, according to the Fed survey on which the data series is based.
Overall, households headed by a high school graduate, a group on the front lines of Trump’s pledge to restore blue collar fortunes, lost $0.4 trillion in net worth during his time in office. Those households represent about a fourth of the total.
A BABY BOOMER BOOM
Generationally, households with a head born from 1946 to 1964 did not get fooled again, as the 1971 rock anthem pledged. The title of Trump’s speech was “The Great American Comeback.” It could just as easily have been “OK Boomer, What About the Rest of Us?”
Baby boomers under Trump, himself a member of that generation, captured around $10 trillion of recent wealth gains, or about two-thirds of the total.
The Fed survey’s demographic estimates are as of 2016, and the population would have changed slightly since then. In 2016 about 36% of household heads (in the case of mixed-sex couples the Fed considers the man to be the head, in same-sex couples it is the oldest of the two) were headed by a member of the baby boom.
Wealth accumulates with time, and older people would tend to have a larger base to start with. But for millennials, those born between 1981 and 1996, the last three years of booming markets have meant an extra half trillion dollars only, spread across about 20.6% of households. GenX’ers, born between 1965 and 1980, got about 21% of the gains, and made up roughly 26% of households. The pre-baby boom “Silent Generation” got 16% of the gains, roughly in line with that group’s share of households.
Analyzed by race, the data told a familiar story of inequality. About 84% of recent wealth gains accrued to the 64% of households that self-identified to the Fed as white.
About 4.6% of wealth gains went to the 14.5% of households that identified as black, and 3.8% to the 10.1% of households that identified as Hispanic.
(Graphic: Household wealth under trump, here)
(Graphic: A boom or the norm? here)
Reporting by Howard Schneider; Editing by Heather Timmons, Andrea Ricci and Chizu NomiyamaOur Standards:The Thomson Reuters Trust Principles.PAID PROMOTIONAL LINKSPromoted by Dianomi
ll of the blithe, occasionally lethal childishness of American political culture was on display Tuesday night during Donald Trump’s second State of the Union address. Most of what’s wrong with the speech predates the current Administration—you can’t blame Trump for the cowardly game of who claps when, or the emphasis, amid intractable ideological conflict, on “unity,” or the persistent presence of Rick Santorum on CNN, or the tacky, exploitative tradition of dragging, say, sick kids, belatedly emancipated prisoners, and the families of recently murdered Americans onto the balcony of the chamber of the House of Representatives to be mentioned less as people than as momentary props. Each practice is longstanding; nobody deserves credit for noticing their fraudulence only when the guy behind the podium is a racist, and a liar, and a creep. The whole thing feels like a sick game, except for the fact—and here is one of our deepest national paradoxes—that the ideas expressed, no matter how stupid the speaker or silly the venue, are, for many people in America and elsewhere, a matter of life or death.
During the past two years, Trump has learned to modulate his anti-immigrant rhetoric in official settings—to dress it up in the bureaucratic language of federal policy. But, on Tuesday, he offered unfiltered immigrant scapegoating, laying practically all the sins of the country at immigrants’ feet. “Working-class Americans are left to pay the price for mass illegal migration,” Trump declared. “Reduced jobs, lower wages, overburdened schools and hospitals, increased crime, and a depleted social safety net.” Insecure jobs, stagnant wages, underfunded schools and safety-net programs, an embarrassing health-care system, crime rates—immigrants, undocumented or otherwise, are responsible for none of these problems. But here was the President of the United States telling those people willing to hear it that they were. “Year after year,” Trump said, “countless Americans are murdered by criminal illegal aliens.” This is untrue. There is no undocumented-immigrant murder wave.
Trump can dress up his demand for a wall all he wants. On Tuesday he also spoke of a “smart, strategic, see-through steel barrier,” and about a “common-sense proposal.” But Trump’s border wall wasn’t born as a common-sense proposal; it was campaign-rally red meat. It was an imagined monument to anti-immigrant sentiment, telling people outside the U.S. to stay out. Trump’s shutdown was fomented not by any “crisis” on the actual border but by a political crisis involving Trump’s base, which had taken Trump at his word about the wall and what it would be. No amount of fear-mongering should distract from that.
Trump is certainly not the first President to shape a story by inviting people to be lauded during his State of the Union address. Barack Obama invited twenty-three different people to his last address, in 2016; at least fifteen of them were activists, working on causes including homelessness, opioid addiction, access to education, same-sex marriage, discrimination against Muslims, and more. The stories they embodied were ones of overcoming adversity but also of working with others toward a better future. Trump’s guests, on the other hand, were all survivors.
They survived D Day.
They survived decades in American prisons and, through the study of religion, earned second chances in their late middle age.
They survived unimaginable grief.
They survived immigration.
They survived cancer. (Notably, although one of Trump’s more ambitious promises was to eliminate new H.I.V. infections within ten years, there was no guest with a story of surviving with H.I.V.)
They survived losing a child.
They survived a mass shooting.
And they survived the Holocaust.
The sole exception to this narrative was the astronaut whose achievement was fifty years old.
Living with a sense of danger so profound and so constant, a people would be unable to think of much beyond immediate survival. They could have little ambition for technological or scientific achievement. They could have no vision of organizing their society in a better, more equitable way. With fear as their only political motivator, their only goal could be a united front. If they felt constantly on the brink of extinction, that might help explain why, on the one hand, they armed themselves obsessively, and, on the other, they put people behind bars for decades at a time. And, living in this constant state of dread, they could not have the presence of mind, or the imagination, to tackle the longer-term danger of climate change—which, of course, makes it less likely that a future historian will be looking at Trump’s State of the Union address at all.
“An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics or ridiculous partisan investigations,” Trump said, in an apparent reference to Democratic congressional probes of his administration and possibly to Special Counsel Robert Mueller’s Russia investigation. “If there is going to be peace and legislation, there cannot be war and investigation. It just doesn’t work that way.”
At the same time, the president did not back down from his insistence that Congress fund a border wall, which was at the center of a 35-day government shutdown that ended only a few weeks ago and could fuel another shutdown on Feb. 15. Tolerance for illegal immigration, Trump said, is “not compassionate,” but “cruel.” “Simply put, walls work and walls save lives,” Trump said. “So let’s work together, compromise and reach a deal that will truly make America safe.” However, top Democrats signaled that Trump’s State of the Union address did little to convince them that a legislative compromise to construct his proposed border wall is possible.
TRUMP AND AOC FEELING ‘SOCIAL’: President Trump vowed during his State of the Union address on Tuesday that “America will never be a socialist country,” in an apparent rebuke to self-described Democratic socialist Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders that drew loud cheers and a standing ovation from Republicans in the House chamber — as well as supportive applause from House Speaker Nancy Pelosi … In response, after the speech, Ocasio-Cortez told Fox News: “I thought it was great. I think he’s scared.”
The progressive firebrand pointedly did not applaud as Trump condemned human trafficking and illegal immigration in his address. In an interview later Tuesday night, Ocasio-Cortez said she was asking herself, “Is this a campaign stop or is this a State of the Union?” She is set to unveil a massive “Green New Deal” with Massachusetts Democratic Sen. Ed Markey next week.
Peggy Noonan: AOC had ‘rare bad night’ – and the rookie lawmaker responds
WASHINGTON — President Trump has stepped back from declaring a national emergency to pay for a border wall, under pressure from congressional Republicans, his own lawyers and advisers, who say using it as a way out of the government shutdown does not justify the precedent it would set and the legal questions it could raise.
“If today the national emergency is border security, tomorrow the national emergency might be climate change,” Senator Marco Rubio of Florida, one of the idea’s critics, said this week. Another Republican, Senator Mitt Romney of Utah, told an interviewer that declaring a national emergency should be reserved for “the most extreme circumstances.”
.. “What we’re not looking to do right now is national emergency,” he told reporters gathered in the Cabinet Room as the shutdown approached its fourth week. Minutes later he contradicted himself, saying that he would declare a state of emergency if he had to.
.. Instead, Mr. Trump would use his authority to transfer funds to the wall that were appropriated by Congress for other purposes. Toward that end, the Army Corps of Engineers has been directed to study whether it can divert about $13.9 million in emergency aide set aside for Puerto Rico, Florida, Texas and California. And with the money secured, the president could drop his opposition to the appropriations bills whose passage would end the shutdown.
.. Former White House aides, who noted that Mr. Trump did not focus on the wall during the first two years of his presidency, said the optics of fighting for the wall were more important to the president than erecting it.
.. But opposition has come from many Republican quarters. Some conservatives see it as an unacceptable extension of executive power. Kellyanne Conway, a White House aide, has said it would essentially give Congress a pass. Representative Mike Simpson, Republican of Idaho and a member of the House Appropriations Committee, said it was not clear to him that an emergency declaration would even lead to the prompt reopening of the government.