Story at a glance:
- American households added $13.5 trillion in wealth, reports the Wall Street Journal.
- While Americans overall saw financial gains, the distribution is lopsided to well-off households.
- Government spending and lending helped the economy recover.
United States households saw a $13.5-trillion increase in wealth during the pandemic, due in part to the government borrowing, spending and lending trillions of dollars to keep the economy afloat and the stock market driving most wealth gain — a boon that has been lopsidedly distributed to the top percent of Americans.
These are the latest findings from The Wall Street Journal, which reported on data from the Federal Reserve.
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While in most cases, economic recessions do not result in people gaining financial assets, The Wall Street Journal cites the unprecedented nature of the pandemic’s recession and recovery and the government’s financial response in this instance. Interest rates in particular drove the stock market increase, which benefited well-off households that already own stocks, according to The Wall Street Journal.
“Rock- bottom interest rates lured more investors into stocks; workers stuck at home tried their hand at trading and tech giants gained even more ground during the shutdown,” reporters Orla McCaffrey and Shane Shifflett write.
More than 70 percent of the increase in household wealth went to the top 20 percent of income earners and about a third went to the top 1 percent, according to The Wall Street Journal.
Stimulus checks and unemployment benefits also helped Americans stay afloat. By October 2020, household checking-account balances of the bottom 25 percent of income earners rose almost 50 percent, The Wall Street Journal reports using data from the JPMorgan Chase Institute.
“What’s also clear is that it’s not only wealthy or upper-middle class Americans who benefited,” wrote Jeremy Ghez, professor of Economics and International Affairs at HEC Paris Business School. “Americans who were able to take advantage of the organizational changes affecting work and companies, and move to other parts of the country where the cost of living is lower (especially rent), fared significantly better.”
“But not every sector experienced these changes,” he noted. “It was only possible for jobs where remote working was an option and in sectors where companies and the workforce had already adapted to new digital tools.”
While the economy is in recovery, low-wage jobs are in short supply. Jobs paying more than $60,000 had grown by 2 percent, according to The Wall Street Journal, and jobs paying less than $27,000 had fallen nearly 24 percent.
As Quartz reported, underlying the shortage of workers is overall low wages.
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