Page 25 - ARUBA TODAY

BUSINESS Tuesday 2 July 2019
A25

Why wealth gap has grown despite record-long economic growth

By CHRISTOPHER RUGABER buyers. For America's mid-
Associated Press dle class, the homeowner-
WASHINGTON (AP) — As it ship rate fell to about 60%
enters its 11th year, Ameri- in 2016 from roughly 70% in
ca's economic expansion is 2004, before the housing
now the longest on record bubble, according to sep-
— a streak that has shrunk arate Fed data.
unemployment, swelled The other major engine
household wealth, revived of household wealth —
the housing market and the stock market — hasn't
helped fuel an explosive much benefited most
rise in the stock market. people, either. The longest
Yet even after a full decade bull market in U.S. history,
of uninterrupted economic which surpassed its own
growth, the richest Ameri- 10-year mark in March, has
cans now hold a greater shot equity prices up more
share of the nation's wealth than four-fold. Yet the pro-
than they did before the portion of middle-income
Great Recession began in households that own shares
2007. And income growth has actually declined.
has been sluggish by his- The Fed calculates that
torical standards, leaving about half of middle-in-
many Americans feeling In this Wednesday, June 26, 2019, photo Hannah Moore poses for a portrait in Los Angeles. come Americans owned
stuck in place. Associated Press shares in 2016, the most re-
Those trends help explain cent year for which data
something unique about America's financial dispari- equity and capital gains, card debt and other loans is available, down from
this expansion: It's easily the ties have widened in large while tens of millions of or- — jumped 80% in the past 56% in 2007. That includes
least-celebrated econom- part because the means by dinary households have decade. More than one- people who hold stocks in
ic recovery in decades. which people build wealth been left mainly on the third of that gain — $16.2 retirement accounts.
As public discontent has have become more exclu- sidelines. trillion in riches— went to The decline in stock mar-
grown, the issue has be- sive since the Great Reces- "The recovery has been the wealthiest 1%, figures ket participation occurred
come one for political can- sion. very disappointing from the from the Federal Reserve mainly because more mid-
didates to harness — be- Fewer middle-class Ameri- standpoint of inequality," show. Just 25% of it went dle-income workers took
ginning with Donald Trump cans own homes. Fewer said Gabriel Zucman, an to middle-to-upper-middle contract work or other jobs
in 2016. Now, some of the are invested in the stock economist at the Univer- class households. The bot- that offered no retirement
Democrats running to chal- market. And home pric- sity of California, Berkeley, tom half of the population savings plans, the Fed con-
lenge Trump for the presi- es have risen far more in and a leading expert on gained less than 2%. cluded.
dency have built their cam- wealthier metro areas on income and wealth distri- Nearly 8 million Americans Hannah Moore, now 37,
paigns around proposals to the coasts than in more bution. lost homes in the recession has struggled to save since
tax wealth, raise minimum modestly priced cities and Household wealth — the and its aftermath, and the graduating from college in
wages or ease the financial rural areas. The result is that value of homes, stock port- sharp price gains since then December 2007, the same
strain of medical care and affluent homeowners now folios and bank accounts, have put ownership out of month the Great Recession
higher education. sit on vast sums of home minus mortgage and credit reach for many would-be officially began. q

US manufacturing growth slows in June for 3rd straight month

WASHINGTON (AP) — U.S. manufacturers. are paying more for prod-
factory activity grew at A measure of new orders ucts," a chemical manu-
a slower pace in June for dropped to 50, which facturer told the ISM.
the third straight month as means they were un- A measure of new export
measures of new orders changed. Manufacturers orders was just 50.5, sug-
and inventories fell. are also holding fewer sup- gesting overseas demand
The Institute for Supply Man- plies, a sign they are wor- is barely growing. Overall
agement, an association ried that demand could order backlogs are also
of purchasing managers, slow further. shrinking, and customers'
said Monday that its manu- "It's concerning," said Tim inventories, while still de-
facturing index slipped to Fiore, chair of the ISM's clining, are doing so more
51.7 last month from 52.1 in manufacturing survey com- slowly. When manufactur-
May. Any reading above mittee. "This is going down ers' customers hold larger
50 signals an expansion. faster than I would like." stockpiles, that means they
While the sector is still grow- The ISM surveys purchas- order fewer goods from In this June 24, 2019, file photo machines work on a Ford vehicle
ing, the report pointed to ing managers at manufac- factories. assembly line at Ford's Chicago Assembly Plant in Chicago.
an ongoing weakening in turing firms, nearly half of There were some positive Associated Press
U.S. manufacturing. Trade whom said that trade pol- signs: Production and em-
fights with China, Europe icy was negatively affect- ployment increased at a fully removed the threat to of Chinese imports. He also
and Mexico, as well as ing their businesses in some faster pace in June. manufacturers. He agreed delayed an across-the-
an increase in the dol- way. President Donald Trump over the weekend to hold board 25% duty on all im-
lar's value, have cut into "Tariffs are causing an in- has postponed two of his more trade talks with Chi- ports from Mexico, which
U.S. exports and increased crease in the cost of goods, largest, most recent tar- na, rather than impose im- he threatened to impose in
uncertainty for American meaning U.S. consumers iff threats, but that hasn't port taxes on $300 billion May.q