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BUSINESS TUESDAY 22 SEPTEMBER 2020
Soaring wealth during pandemic highlights rising inequality

By CHRISTOPHER RUGABER package from Congress
AP Economics Writer would boost the economy
WASHINGTON (AP) — Amer- and help narrow inequal-
icans' household wealth ity, because Congress can
rebounded last quarter to provide additional direct
a record high as the stock payments and more jobless
market quickly recovered aid. Yet there is no signs of
from a pandemic-induced a deal in Congress.
plunge in March. Yet the The data the Fed issued
gains flowed mainly to the Monday pointed to huge
most affluent households gaps in wealth along ra-
even as tens of millions of cial lines. White households
people endured job losses owned nearly 85% of to-
and shrunken incomes. tal wealth at the end of
The Federal Reserve said March. Black households
Monday that American owned just 4.4%, Hispanics
households' net worth 3.2%.
jumped nearly 7% in the Much smaller financial re-
April-June quarter to $119 sources mean that many
trillion. That figure had sunk nonwhite households
to $111.3 trillion in the first are forced to sharply cut
quarter, when the corona- spending after a job loss
virus battered the econo- or reduced incomes. Re-
my and sent stock prices search by economists Peter
tumbling. Ganong and Damon Jones
Since then, the S&P 500 at the University of Chicago
stock index has regained In this Jan. 3, 2020 file photo, the Wall St. street sign is framed by American flags flying outside the found that Black Americans
its record high before losing New York Stock Exchange in New York. cut spending 50% more
some ground this month. It Associated Press than whites when faced
was up 2.8% for this year as with the same income loss-
of Friday. The tech-heavy for most households could The amount of money purchases are intended es. Hispanics reduced theirs
Nasdaq has soared more force many consumers to in checking accounts to ensure that the corpo- by 20% more.
than 20% this year. cut back on spending in jumped 33% to $1.8 trillion. rate bond market functions Even with household wealth
The full recovery of wealth the coming months, now Savings accounts rose 6.1% smoothly and that large at a record high, millions of
even while the economy that government financial to $11.2 trillion. corporations can borrow people face the threat of
has regained only about aid such as enhanced un- Federal Reserve Chair Je- by issuing debt. eviction or going hungry. A
half the jobs lost to the employment benefits has rome Powell has repeat- Its purchases have been Fed report released Friday
pandemic recession under- expired. Any significant edly expressed concern relatively small relative to found that nearly one-quar-
scores what many econo- such cutback in spending about widespread inequal- the size of the overall mar- ter of adults said their fam-
mists see as America's wid- would, in turn, weaken the ity in the U.S. economy and ket. But the Fed's actions ily had received some form
ening economic inequality. economy. last week said it is likely in- have restored confidence of economic help since the
Data compiled by Oppor- Household wealth reflects hibiting growth. in the bond market and pandemic began, whether
tunity Insights, a research the value of Americans' "Those are things that hold enabled large U.S. compa- from unemployment ben-
group, show that the high- homes, plus bank ac- back our economy," Pow- nies to embark on a bor- efits, food stamps or do-
est-paying one-third of jobs counts, stocks, bonds and ell said at a news confer- rowing binge. nations of groceries from
have almost fully recovered other assets minus mort- ence. "If we want to have The Fed's report Monday charitable groups.
from the recession, while gage debt, auto loans, the highest potential out- showed that business debt Nearly 23 million adults
the lowest-paying one-third credit card debt and other put and the best output jumped 14% in the second live in households in which
of jobs remain 16% below borrowing. (The figures are for our economy, we need quarter, after an even big- there wasn't enough to eat
pre-pandemic levels. not adjusted for inflation.) that prosperity to be very ger rise of 18.4% in the first at some point in the past
The wealth data "high- During the April-June quar- broadly spread." quarter. seven days, according to
lights the inequalities in ter, the value of house- Yet many analysts say the Amanda Fischer, policy the Census Bureau's House-
the recovery in the sense holds' stock portfolios rose Fed's policies have inad- director at the Washing- hold Pulse survey.
that high-income workers $5.7 trillion, the Fed said. vertently contributed to ton Center for Equitable The rebound in wealth "is
not only have jobs that for Home values grew $500 bil- inequality by disproportion- Growth, a progressive think not enough to say that the
the most part have come lion. ately benefiting stockhold- tank, said that the Fed economy is back," Jones
back; they also have sav- Americans also sharply in- ers. The central bank has could have required those said. "People have lost their
ings that have continued to creased their savings last cut its benchmark short- companies whose bonds jobs, they're working less
grow," said John Friedman, quarter, likely reflecting a term interest rate to nearly it bought to keep all their because it's dangerous
an economist at Brown Uni- cutback in spending by zero and is buying about workers. Instead, for exam- and risky and their hours
versity who is co-director of wealthier consumers ner- $80 billion in Treasurys a ple, the Fed has purchased have been cut."q
Opportunity Insights. vous about the virus's threat month. Both moves have bonds issued by ExxonMo-
The richest one-tenth of to the economy. The fed- kept rates on government bil, yet that company has
Americans owned more eral government's finan- bonds ultra-low, thereby said it is considering layoffs.
than two-thirds of the na- cial assistance in the form encouraging investors to "The Fed did have the op-
tion's wealth, according to of $1,200 checks and $600 plow money into stocks portunity to attach condi-
Fed data through the end in weekly unemployment and boosting share prices. tions to the lending, and
of March, the latest period benefits also likely allowed The Fed has also bought they chose not to," Fischer
for which figures are avail- some lower-income house- about $12 billion in corpo- said.
able. The top 1% owned holds to save more. That rate bonds and exchange- Powell and many econo-
31%. government assistance has traded funds made up mists have said that an-
The small financial cushion since expired. of corporate debt. Those other financial rescue