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The dust has now settled from the 2008 financial crash. The money, too. The question of the day: In whose pockets?
Two sets of researchers have offered answers to that question in recent weeks. Both have based their answers on the same original source material: the surveys of American households the Federal Reserve conducts every three years, most recently in 2007. And both have attempted to update that data to 2009.
Researchers at the Fed did their updating by re-interviewing in 2009 the households surveyed in 2007. The results from this re-interviewing, released the week before last, show how wealth holdings have changed since the crash for all U.S. households, the richest 10 percent included.
The Economic Policy Institute has taken a different approach. EPI’s new briefing paper, also released the week before last, builds upon the work of NYU economist Edward Wolff, the nation’s top wealth analyst.
EPI and Wolff update the 2007 Fed numbers via the Fed’s own “Flow of Funds” data, a set of tables revised quarterly that track changes in everything from bank deposits and money market funds to real estate investment trusts.
The numbers the Fed and EPI approaches generate — for wealth holdings in 2009 — don’t match up exactly. EPI, for instance, shows lower totals for both average and median net worth.
Another difference: EPI’s new briefing paper, The State of Working America’s Wealth, 2011, zones in much tighter than the new Fed report on the upper reaches of America’s wealth distribution, all the way to the top 1 percent.
All wealth levels of households, both approaches agree, lost net worth between 2007 and 2009. But the “recovery” since 2007, the EPI figures indicate, has left a greater share of U.S. wealth in the pockets of the already wealthy.
Households in the nation’s richest 1 percent, says EPI, lost an average $5.2 million between 2007 and 2009, down to an average $14 million net worth. But households below that top 1 percent lost more.
The settling dust, the EPI numbers detail, left the top 1 percent with 35.6 percent of the nation’s wealth, up from 34.6 percent in 2007. That 35.6 percent, EPI notes, makes for the largest top 1 percent “share ever reported in these data.”
The middle 20 percent of American households, in the meantime, lost nearly $45,000 off their $109,600 average net worth between 2007 and 2009. The overall wealth share of America’s bottom 80 percent, adds EPI, fell from 15 percent of the nation’s bounty in 2007 to 12.8 percent two years later.
The Great Recession, sums up EPI’s Sylvia Allegretto, has “further increased an already vast wealth divide.” And how.