Washington, D.C. – President Donald Trump consistently extolls the virtues of the “record” number of all-time high Dow Jones closes seen during his tenure as POTUS—portraying the health of the stock market as a barometer of the country’s overall economic health.
70 Record Closes for the Dow so far this year! We have NEVER had 70 Dow Records in a one year period. Wow!
— Donald J. Trump (@realDonaldTrump) December 18, 2017
But the reality is that Trump is simply discussing how well American oligarchs are doing—not the average American citizen.
A recent study, by NYU economist Edward N. Wolff, reveals this unsavory fact in stark detail.
In fact, the truth is that the top 10% of American households—defined by total wealth—now own 84% of all stocks as of the year 2016, according to the stunning analysis.
“Despite the fact that almost half of all households owned stock shares either directly or indirectly through mutual funds, trusts, or various pension accounts, the richest 10% of households controlled 84% of the total value of these stocks in 2016,” Wolff writes.
According to a report by Money, a Time Inc. magazine:
That number—which accounts for individual shares as well as stocks held via mutual funds—represents a big change from 2001, when the top 10% owned just 77% of all stocks.
Furthermore, while virtually all (94%) of the very rich reported having significant stock holdings—as defined as $10,000 or more in shares—only 27% of the middle class did. (The study framed that middle class as the group between the poorest 20% and the richest 20% of Americans.)
The concentration of stock holdings among the rich, Wolff says, is due to the twin stock market busts of 2001 and 2008. While the middle class was scared off by these declines, he explains, wealthier investors were able to swoop in and increase their holdings.
Or in more appropriately put, when those market crashes occured – the average Joe/Jane likely ended up with a home financially underwater and a decimated 401K – thus leaving those that have the financial means (rich people) to accumulate further wealth.
The study revealed that the wealth of the middle class is mainly tied to home ownership, which is drastically different than that of the wealthy, whose assets are often invested in equities and able to be used to further accumulate wealth through various investment mechanisms.
The truth is that although the stock market is at an all-time high, Americans owe more, save less, and are poorer than they have been in decades.
In fact, while the stock market continues to have “record” closes, here are some disheartening statistics that reveal the dire shape of the average American’s finances:
According to a report from Axios:
A greater share of Americans have more debt than money in the bank than at any point since 1962, according to Deutsche Bank economist Torsten Slok. And, in a note to clients yesterday, Slok said that, despite record stock market wealth and home price levels just shy of housing-bubble highs, Americans are poorer than at any point in nearly a quarter century.
Why it matters: The data suggest that the third-longest economic expansion in history, and the lowest jobless rate in 17 years, has benefitted an exceedingly thin slice of the American public.
Here are some sobering stats about the real shape the American economy is in to consider.
1. A greater share of Americans have more debt than money in the bank than at any point since 1962, according to Deutsche Bank economist Torsten Slok.
2. 30.4% of US families have negative net worth despite the recovery in housing and the stock market.
3. Median net worth is below where it was in 1989.
4. Inflation adjusted, net worth may be the worst in history. $78,000 is not worth what it was in 1989, to say the least.
Although President Trump likes to boast about the “record” performance of the stock market, what he actually means is that his fellow uber rich peers are enjoying windfall profits from the success of the stock market—while the average American’s net worth is perhaps the worst in history adjusted for inflation.
Please share this story to help others understand that “record” stock markets don’t translate to a wealthy public at large—but rather, a further concentration of wealth among the richest Americans!