News

Survey highlights widening U.S. wealth, income gap

Survey highlights widening U.S. wealth, income gap

MONEY: Though incomes of the highest-earners rose, none of the groups analyzed by the Fed had regained their 2007 income levels by 2013, underscoring deep scars from the financial crisis and its aftermath.

(Reuters) – The gap between the richest Americans and the rest of the nation widened after the Great Recession, a survey by the Federal Reserve showed on Thursday, suggesting deepening U.S. income inequality.

Though incomes of the highest-earners rose, none of the groups analyzed by the Fed had regained their 2007 income levels by 2013, underscoring deep scars from the financial crisis and its aftermath.

The data comes from a massive survey of consumer finances conducted by the Fed Board of Governors every three years. Many other studies have also shown the lasting effects of the recession and documented rising income disparity in the United States.

The Fed survey released suggests that wealth and income is concentrated not just within the top 1 percent, as some analyses have suggested, but actually among a slightly broader slice of the ultra-rich: the top 3 percent.

From 2010 to 2013, average income for U.S. families rose about 4 percent after accounting for inflation, the survey showed. All of the income growth was concentrated among the top earners, the survey showed, with the top 3 percent accounting for 30.5 percent of all income.

The disparity was even greater by wealth, with the top 3-percent holding 54.4 percent of all net worth in 2013, up from 51.8 percent in 2007 and 44.8 percent in 1989.

Fed Chair Janet Yellen has called income inequality a disturbing trend, attributing some of it to the weak jobs market but also to underlying trends like technology and globalization.

Overall for U.S. families, wealth stabilized from 2010 to 2013, after falling sharply during the prior three years. Fed economists attributed that pattern to the declines in home and business ownership during the recession, which stripped many families of their biggest sources of wealth.

Families with income in the bottom half of those surveyed reduced their participation in retirement plans, continuing a trend seen from 2007 to 2010, but middle-income families increased their participation somewhat, the survey found. Still, overall participation rates were down from levels seen in 2007.

Although wealth did not change much overall, many measures of debt decreased, the survey found, driven largely by declines in home ownership. On average, debt fell 13 percent.

(Reporting by Ann Saphir; Editing by Tom Brown)

Recent Headlines

in Sports

NFL: Legal process will play role in punishments

nfl

Punishment for players implicated in domestic violence will not be imposed upon arrest but at some point "farther down the process."

in National

Ebola czar starts work, drugmakers launch vaccine drive

ebola

The Obama administration is ramping up its response to the potential spread of the virus.

in National, World

Canadian parliament attacked, soldier fatally shot

canadashooting

A gunman shot a soldier and then entered the country's parliament buildings, with at least 30 shots fired in dramatic scenes in the heart of the Canadian capital.

in National

U.S. farmers battling bugs

harvest

With record harvests depressing prices, farmers are using chemicals that protect stored grain from critters.

in National, World

Jeffrey Fowle, freed from N. Korea, back on American soil

fowle

U.S. Secretary of State John Kerry welcomed the release of one of three Americans held in North Korea.