Bloomberg News reports that in an eight-minute speech that witnessed the stock markets dwindling last week, the Chair of Federal Reserve, Jerome Powell, repeated what he always said regarding arresting surges in consumer prices. He said that the burden of higher inflation most adversely affects those unable to withstand the same.
Data filtered through the Realtime Inequality tracker has provided nuanced indications of how the 50% of the US households at the bottom are performing amidst the present condition of the economy. This segment usually comprises that group of individuals that were in the net worth slab of $166,000 or lower before the pandemic struck and are the ones that are currently enjoying the most vital position under the current conditions.
It was found that the collective inflation-adjusted wealth of the group rose by 2.8% through the first half of the year, per the tracker developed by the University of California, Berkeley’s three economists. Compared to them, the ones in the middle have been found to have slumped by 4.9%. The top 1% have lost more than 10%, given that they are subjected more to the bear market conditions in stocks.
What has kept Working-Class Americans afloat?
The working class of Americans has managed to stay buoyant by the outsized gains in wages in what is being said as one of the tightest labor markets in years. Income among the 50% at the bottom after being adjusted for inflation was found to have surged by 1.3% during the first half of 2022, and income for the middle 40% dropped by 0.2%. Since April 2020, the real income growth for the bottom half of the US was found to be at 45%, which has approximately doubled the pace across the country.
Bloomberg News reports that the recent gains have created a more significant dent in inequality. The lower half (50%) of the Americans account for just 1.2% of the country’s total wealth, and the top 1% has been controlling for about 35%, a stake that has manifested an upward trend over the last four years.
With the fears of recession escalating, plunging stock values, and the housing market cooling down, the year 2022 has not been easy for most Americans. The retirement crisis is just getting worse with time for the country.
In the meantime, consumers across the board have been turning to plastic cards to keep pace with their spending, adding as much as $46 billion to the balance in 2022’s second quarter. In 20 years, the 13% year-over-year surge was the most significant jump related to credit card debt, per a study by New York Fed.
