The Bottom 50% of Americans Are Building Wealth Even as Inflation Bites

This probably comes as a surprise after all the politicized gloom-and-doom reporting, but its good news. Wages have been going up, while stocks are somewhat down from the peak (8 months ago). The top earners are more likely to be invested in stocks, so they see losses (10%), while the lower classes see gains in wages (tight labor market drives up wages)

The Bottom 50% of Americans Are Building Wealth Even as Inflation Bites
https://www.msn.com/en-us/money/mar...ven-as-inflation-bites/ar-AA11eJMX?li=BBnb7Kz
.... data filtered through the Realtime Inequality tracker provide a nuanced picture of how the bottom 50% of US households are faring in today’s economy. The group, generally those with a net worth of $166,000 or less before the pandemic, are in the strongest relative financial position in a generation.

The group’s collective inflation-adjusted wealth grew by 2.8% through the first six months of the year, according to the tracker, developed by three economists at the University of California, Berkeley. By contrast, those in the middle 40% were down 4.9%, while the top 1% — more heavily exposed to the bear market in stocks — lost more than 10%.

America’s working class has been buoyed by outsized wage gains in one of the tightest labor markets in decades. Incomes among the bottom 50%, adjusted for inflation, increased by 1.3% in the first half of 2022, while the middle 40%’s fell by 0.2%. Since April 2020, real income growth for the lower half of the US, at about 45%, has roughly doubled the pace nationwide.

 

People are building wealth because of inflation? Credit card debt is not going up? Less people are living paycheck to paycheck? I think some clarification is needed on this article.

 

Actually it says inflation-adjusted wealth is growing among the bottom 50%.

 

University of Berkeley economists. They need to get out and talk to the people they claim are doing so well.

 

Its not an opinion poll, they study data.

What are your numbers (adjusted for inflation), and your sources?

 

I would actually like to see this study or tracker. Without seeing anymore than the summary of the numbers in this Bloomberg article my initial question is why did the wealth of the bottom 50% raise but 2.8% whereas every other group fell by considerable more. I think we can all come up with reason for the drop in wealth but I was wondering why the rise in wealth of households below $166K.

Without anymore information here is my speculation:
1. Lower unemployment rates. (More people are working)
2. Higher wages for due to higher demand for labor. (I know we had to raise wages to attract new talent)
3. Debt becomes cheaper during inflation. (essentially you are paying back borrowed money with money that is worth less).
4. My guess is households with $166K of net-worth or less has a higher percentage of their NW in basic capital items like a home or car. These items has appreciated with inflation. Even older cars are selling for more to to lack of supply and increase cost of new cars.

If you were to think about it not all of these causes are positive for the economy. Lower unemployment rates may be but the rest is inflationary or causes inflation.

 

Your speculation is in line with what the article says. There is lot of competition in the lower wage groups and its driving salaries up.

 

This is a study from the university of Berkley. May as well have came from the DNC. I wouldn’t trust it. That university is a partisan cesspool of liberal politics.

that aside… I don’t think this can possibly be true. I would like to see all the metrics they chose to be there. Used cars for example was one of the highest rates of inflation. Do the poorer 50% not drive? Not to mention gas prices that raise the cost of everything. I also know plenty of people that are likely in this class they speak of. None of them feel more comfortable now than they did before.

one thing this study does point out but was not focused on is that more wealth was lost than gained even by whatever standards they’re running on. Thus bringing more successful people in to the class of the less successful. But this seems to be something liberals cheer. So I’m surprised they’re peddling this BS.

 

No one is asking you to trust anything, except maybe a nice Monday morning conspiracy from Breitbart.

Its funny you can't hide your disappointment over the fact that one group of Americans are actually doing ok.

Used car prices have very little to do with the increase in their wealth.

 

no surprise, Democrats favor the working class on down, Republican favor the 1%

 

Got to cut my post down because you can’t address it. Makes sense

 

If that is the case then I think if you were to speak with the Berkley economist they would recognize these numbers are problematic for the economy. The small rise in net-worth is a side-effect of the current economic problems. While a low employment rate is a good thing usually low unemployment or an economy operating a full employment is accompanied by growth. Our growth has been decreasing and some are claiming recession.

My problem is not with the Berkley economist. I have a tremendous amount of respect for them. I think the problem is Bloomberg is trying to spin what should be a negative indicator into a good thing.

 

Negative indicator? Is an increase in income adjusted for inflation really such a bad thing?

 

It could be. I haven't looked at the study but as I originally said if a lot of the increase wealth is a side effect of inflation then it can be a problem. For example if you owed a 100 dollars debt before and if there is hyper inflation then that $100 debt shrinks relative to the inflated dollar. So in that sense you are wealthier but is it a good outcome for the economy. Also if capital items rise in value due to shortages such as new cars or parts like I spoke about originally that is not good, especially long term for the economy. In times of disaster some goods items can appreciate in value but from an economic policy stand point it is not a good thing.

A decrease in unemployment is a good thing but we would like to see growth along with it. As more people are employed the economy should produce more and everyone benefits not just the poor. Yet stock prices are falling. GDP should be increasing and wealth should be increasing for everyone not just the poorest group. (ask yourself if we are at full employment and everyone is working and consuming more, why is the economic growth slowing?) If we looked into this more, which I assume those Berkley economist have, we would better understand the issue. There could be many negative factors than increase this number too such as a contracting work force. There can be so many things that impact this study and we have not seen any of the details beyond some summary numbers.

 

Higher wages, due to higher demand is a bad thing?
Paying back cheaper debt allows you to take on more, which is amazing for an economy, as debt also gives people motive to work, and drives investment.
Seems like everything on your list is just the free market at work, which is amazing for any economy aside from a Russian run economy. For Russia this is bad, which makes it good.

Putins at this very moment is instilling price Controls for food...Price controls! We are winning.

 

You should read my other post in this thread. I think higher wages due to demand is a generally a good thing but my whole point was the summary information presented by Bloomberg seems suspect.

 

If the top are able to show losses, who are the new 87K IRS agents going to target?

 

A 0.2% reduction in wealth doesn't say anything about taxes pair or taxed avoided. The IRS agents were hired to look for people who cheat in their taxes. You like law enforcement, don't you?

 

Using computers I'm sure. We all know garbage in garbage out. Do you have specifics on what data they used?

 

What are your numbers (adjusted for inflation), and your sources?

Can you just produce your numbers showing otherwise, as opposed to shrieking "I don't believe it"?

 

There is a difference in enforcing a law when someone actively breaks it, and fishing for a possible infraction.

You don't mind an LEO trailing you from your door to every where you go on a given day, do you?

 

Sure, and that's the point. We know for fact that lots of people are breaking tax laws.

Tax cheats cost an estimated $1 trillion per year, and that's a big coin. Why are you opposed to collecting it? Why do you want criminals keep their loot?

No one is planning on following people around. Tax law violation can be investigated by other means. You have to ask.......

 

So, they're "lying" because they're economists at UC Berkeley? Uh, yeah--great argument.

 

Most likely its a property value thing. People like me who managed to get a cheap house at just the right time are in a great position for inflation, relative to renters anyway. Grocery baggers now make what I was making when I started my mortgage, and are paying more than my mortgage for a small apartment. But I'm 'building wealth' so everything is fine, apparently...

 

Tax code/laws are voluminous and complicated. Most everyone commits tax fraud without knowing it. Of course, the wealthy can afford good accountants and lawyers, so what you are cheering for will disproportionately affect the poor and middle. The poor are several times more likely to be audited.

I support laws that benefit society.