US 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 per cent since he became president.On average, Americans have seen a 17 per cent jump in household wealth since Trumps election, while wealth at the bottom half has increased 54 per cent.This is a blue collar boom, Trump also said Tuesday.
Thats 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 Obamas 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 per cent increase in their household wealth under Trump, the poorest half of American households, around 64 million families, still have just 1.6 per cent of household net worth.HALF OF AMERICANet worth combines the value of assets like real estate and stocks and subtracts liabilities like mortgage loans and credit card balances.Because Americas bottom 50 per cent 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 US household wealth of $107 trillion.Here is what the Feds Distributional Financial Accounts have to say:Historically, 17 per cent growth in household wealth over 11 three-month quarters, or nearly three years, is pretty standard.
There have been 110 such periods since the Feds 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 per cent .
Under Trump it is slightly less, at 1.34 per cent .The bottom half of households saw their net worth rise by 54 per cent under Trump, from $1.08 trillion to $1.67 trillion.
Thats compared to an 18 per cent rise for the top 1 per cent , 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 per cent 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 Trumps 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 BOOMGenerationally, households with a head born from 1946 to 1964 did not get fooled again, as the 1971 rock anthem pledged.
The title of Trumps 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 surveys demographic estimates are as of 2016, and the population would have changed slightly since then.
In 2016 about 36 per cent 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 per cent of households.
GenXers, born between 1965 and 1980, got about 21 per cent of the gains, and made up roughly 26 per cent of households.
The pre-baby boom Silent Generation got 16 per cent of the gains, roughly in line with that groups share of households.Analyzed by race, the data told a familiar story of inequality.
About 84 per cent of recent wealth gains accrued to the 64 per cent of households that self-identified to the Fed as white.About 4.6 per cent of wealth gains went to the 14.5 per cent of households that identified as black, and 3.8 per cent to the 10.1 per cent of households that identified as Hispanic.