I came across an interesting article on Seeking Alpha which takes a new, and in-depth view of our economy. The “economy” is segregated into two economies, the top 40 percent and the bottom 60 percent. This is quite a concept and I liked it.
The article tells us to stop looking at average statistics. It’s a serious mistake to look at them. What’s really happening in our economy is hidden and leading to miscalculations. This determines what investors and wealth managers do.
The above chart displays the wealth of the top one-tenth of 1% of the population is about equal to that of the bottom 90% of the population, which is the same sort of wealth gap that existed during the 1935-40 period.
The article starts off looking at income and the economic picture and then turn to some related lifestyle and political differences.
Highlights of the article include:
- Since 1980, median household real incomes have been about flat
- The average household in the top 40% earns four times more than the average household in the bottom 60%
- Only about a third of the bottom 60% saves any of its income
- The middle class has experienced less post-tax and transfer income growth than the bottom quintile since 1980
- Those in the top 40% have benefited disproportionately from changes in asset values relative to those in the bottom 60%
This article is enlightening. I highly recommend reading it.
Article from Seeking Alpha: