Posted on 02/24/2006 6:24:09 AM PST by Sam's Army
WASHINGTON - After the booming 1990s when incomes and stock prices were soaring, this decade has been less of a thrill ride for most American families.
Average incomes after adjusting for inflation actually fell from 2001 to 2004, and the growth in net worth was the weakest in a decade, the Federal Reserve reported Thursday.
Many families were struggling in the aftermath of the 2001 recession and the bursting of the stock market bubble in 2000, the Fed's latest Survey of Consumer Finances showed. The comprehensive look at household balance sheets comes every three years.
Average family incomes, after adjusting for inflation, fell to $70,700 in 2004, a drop of 2.3 percent when compared with 2001.
That was the weakest showing since a decline of 11.3 percent from 1989 to 1992, a period that also covered a recession.
The average incomes had soared by 17.3 percent in the 1998-2001 period and 12.3 percent from 1995 to 1998 as the country enjoyed the longest economic expansion in history.
The median family income, the point where half the families made more and half made less, rose a tiny 1.6 percent to $43,200 in 2004 compared with 2001.
Economists said the weakness in the most recent period was understandable given the loss of 2.7 million jobs from early 2001 through August 2003, when the country was struggling with sizable layoffs caused by the recession, the terrorist attacks and corporate accounting scandals.
The weak income and the stock market decline in the early part of the decade, which wiped out $7 trillion of paper wealth, had an adverse impact on family balance sheets.
Net worth, the difference between assets and liabilities such as loans, rose by 6.3 percent in the 2001-04 period to an average of $448,200. That gain was far below the huge increases of 25.6 percent from 1995 to 1998 and 28.7 percent from 1998 to 2001, increases that were fueled by soaring stock prices.
The 2001-04 performance was the worst since net worth actually declined by 9.9 percent in the 1989-92 period.
The report showed that the slowdown in the accumulation of net worth would have been even more sizable except for the fact that homeowners have enjoyed big gains in the value of their homes in recent years.
The gap between the very wealthy and other income groups widened during the period.
The top 10 percent of households saw their net worth rise by 6.1 percent to an average of $3.11 million while the bottom 10 percent suffered a decline from a net worth in which their assets equaled their liabilities in 2001 to owing $1,400 more than their total assets in 2004.
"This is the continuing story of the rich getting richer," said David Wyss, chief economist at Standard & Poor's in New York. "Clearly, the gains in wealth are going to the top end."
Democrats used the new report to blast President Bush's economic policies, contending it would be wrong to make permanent his tax cuts, which primarily benefit the wealthy.
"These statistics show why, even though GDP is rising, most people do not feel better off," said Sen. Charles Schumer, D-N.Y.
The Fed survey found that the percentage of Americans who owned stocks, either directly or through a mutual fund, fell by 3.3 percentage points to 48.6 percent in 2004, down from 51.9 percent in 2001.
Analysts said this was an indication that investors burned by plunging stock prices in the decade's early years have been leery about getting back into the market.
The share of Americans' financial assets invested in stocks dipped to 17.6 percent in 2004, down from 21.7 percent in 2001.
Reflecting the housing boom, the share of assets made up by home ownership rose to 50.3 percent in 2004, compared with 46.9 percent in 2001.
The Fed survey found that debts as a percent of total assets rose to 15 percent in 2004, up from 12.1 percent in 2001. Mortgages to finance home purchases were by far the biggest share of total debt at 75.2 percent in 2004, unchanged from the 2001 level.
There was concern that families might start to feel even more squeezed as the cost of financing their debts increases along with rising interest rates.
Although surging home values have supported consumer spending in recent years, analysts worry about the economic impact if, as expected, the home price surge begins to slow this year.
"This report shows a race between factors boosting net worth, such as home ownership, and factors pushing the other way, such as weak wage growth," said Jared Bernstein, senior economist at the liberal Economic Policy Institute, a Washington think tank.
I posted this text not because of the source but because it stands on its own. It states obvious moral truths, easy to see for every Christian and even for most on non-Christians!
You can't think of anything better, but you are a Catholic.
Can you show me what is specifically Catholic about the quotes I posted? I bet you cannot!
Why is that when the freemarketeers cannot find counter arguments they attack the sources or authors? It happens almost every time, either the source is too left wing, or too right wing, or the author has marital problems or warts or what else.
The best of all is the claim that the author is question is "VERY fallible"! Not like Ayn Rand or Milton Friedman :)
You always use religious tracts, as refutation. It works for you, I guess; but no, it really doesn't work for everyone.
Actually this encyclical contains many elements which are not religious - like XX century phenomenology, axiology of Max Scheller, personalism, experience of struggle against Communism (Solzhenitsyn, Kolakowski etc) and more. Those elements are not always obvious but can be seen if you study the topic.
Karol Wojtyla was one the people who overthrew Communism with the power of ideas. Free market ideology is too obsolete and crude to be useful in modern world. Already in time of Dickens it was an object of well deserved scorn.
Free trade was an "object of scorn" to KARL MAX; so was religion.
Really? Where did you get this idea? Karl Marx like free trade - he wanted capitalism to become a global system and world revolution at the end. He has seen freemarketeers as his helpers.
Free market ideology was object of scorn for to Charles Dickens. His books have a lot of funny sarcastic passages at the expense of freemarketeers. It was Dickens and people like him who prevented the Communist revolution in the West by encouraging preventive reforms.
Too bad Russian upper class did not pay attention.
Your buddy Karl thought free trade would lead to the revolution. Do you agree?
There's a lot said there, without realizing it, perhaps.
I find it entertaining when people her try to convince us that Karl Marx was in favor of free market capitalism based on the short quote at the end of his speech. During the entire speech he speaks to the fact that he despises free trade and the people who support it. To your point Joe, I have never understood why so many choose to ignore the rest of this speech in favor of that one line at the end.
Marx wasn't an economist but he most certainly supported totalitarianism. Marx did not support free trade, he was for it only because he believed it would lead to the destruction of capitalism. If anyone here believes free trade is harmful to our society, then they share the same beliefs and economics as Karl Marx. Having a lot in common with Karl Marx, by being anti-capitalism, is not something conservatives should strive for - although many here appear to be trying.
:-)
If the average fell and the median rose the bottom half is getting richer
There is NOTHING in his works, that is particularly anti-freetrade and he had nothing whatsoever to do with preventing the Communist revolution in the West! HE WAD DEAD, WHEN THE BOLSHEVICS TOOK OVER RUSSIA!
You can lay a lot of things at Charlie's feet ( exposing the boarding schools which were really just warehouses for unwanted children, originating what we all think Christmas celebrations are, beginning THE CLIFF HANGER, and a few other things like that ), but "preventing a Communist revolution in the West, isn't one of them!
Glad that you asked. Yes, but as one part of the whole process. Free trade/globalization was to integrate world economy into one whole, leading to the increase in productivity, lowering of wages and concentrating the wealth in the hands of the few winners of the global Monopoly game.
According to Marx it would make the very capitalism obsolete the same way as feudal aristocratic system became obsolete because of its victory (establishing order, secure trade, cities and central government with stable currency make knights superfluous and merchants powerful).
Marxist teaching was that the mature global capitalism will enter the dead end street when it will create the overabundance of goods while the workers will be in large part redundant and unemployed. This will lead to the contradiction between the abundance in the midst of general poverty.
According to the classical Marxism (as opposed to Leninism/Stalinism) the socialism will provide the solution using the tools late capitalism created.
Conservative response was to protect national borders and economies (tariffs), secure decent living for the working class (unions, safety nets etc), anti-trust laws and so on ...
But after fall of Soviet system (which according to the classical Marxism was premature as it started in backward countries without developed capitalism) the right wing of Western elites forgot all that and decided to move back to XIX century. (See my tagline)
The left wing very likely enjoys the gradual sliding of mankind into the revolutionary trap.
The Christian social doctrine, being truly conservative, is seen both by free market right and socialist left as a backward obstacle to progress.
There will be a large idle class of people. It will grow. I seriously doubt that there will be any way to avoid it. There will not by jobs that people without any specialized irreplacable skills can hold.
We will get socialism, and you won't be able to blame people if things don't change. If you tell most people that there is no work for them, and they have the power to vote the money away from the technology, multinational haves, it will be in their short term economic interest to massively redistribute it. We are marching towards our doom, and just don't know it.
I think most of the "leaders" know it, they just don't care as long as they get theirs NOW, and to hell with what happens to America tomorrow.
It's a tragedy that America cannot produce some intelligent leaders. The intelligent ones don't have enough money to get elected to the globalist boy's club.
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