Can you believe that we’re still in a recession? It’s been seven years since the Great Recession started, and for most Americans, it never ended.
I know, that’s not what you’ve heard in the news. GDP increased at an annual rate of 4.6 percent last quarter, a rapid clip compared to the norm. Despite its recent dip, the Dow has more than doubled since it hit rock bottom in March 2009. Housing prices have bounced back to their pre-recession level. Officially, the recession ended five years ago.
But there’s something the financial newscasters don’t tell you: Unless you’re rich, those numbers don’t apply to you.
Take those GDP gains. The economy’s growing, sure, but is your paycheck? If you earn a six-figure salary, probably. Otherwise, it’s unlikely. From 2009 to 2012, the country’s entire economic growth went to the richest 10 percent of Americans.
Think about that. The entire “recovery” was experienced by only one-tenth of the population. Actually, more than the entire recovery — because the bottom 90 percent lost over 15 percent of their income! So the richest 10 percent didn’t just take all the growth — they also took away a big chunk of what everyone else already had!
And since the most common definition of a recession is declining income, 90 percent of Americans have been in a recession for seven years…and counting.
The economist Pavlina Tcherneva brought this fact to our attention a few weeks ago with a now-famous chart showing the richest 10 percent taking an increasing percentage of each recovery over the past 60 years. But that’s just the tip of the iceberg.
It used to be the fact that wages would go up as unemployment went down, but not so much anymore. Workers don’t have that much bargaining power nowadays. Adjusted for inflation, wages have barely budged since the recession ended.
Nor have most Americans benefitted much from the booming stock market, since 80 percent of it is owned by the richest 10 percent.
Nor have they benefitted from the Big Government that Republicans are always complaining about, since federal spending is actually lower than what the Republicans were proposing a couple years ago during the deficit “crisis.”
Nor have they benefitted from the housing recovery, since almost all the growth seems to be coming from the most expensive one percent of houses. Meanwhile, home sales in the other 99 percent of houses have actually been going down this year.
Nor have they benefitted from private charity, according to a new study by The Chronicle of Philanthropy, which found that the rich have been reducing the share of their income that they give to charity from 2006 to 2012. Meanwhile, the poor and middle class have actually been giving an increasing share of their income to charity!
So it’s no surprise that the middle class is poorer today than it was in 1989. Back then, the average American household had the inflation-adjusted equivalent of $85,000 in wealth. Today, they have $81,000.
Nor is it a surprise that a recent study by the political scientists Martin Giles and Benjamin Page found that, over the course of 1,779 polls of the American public from 1981 to 2002, Congress almost never passed a law that 90 percent of Americans supported if the richest 10 percent opposed it. But when the richest 10 percent wanted a law passed and the other 90 percent opposed it, the law had a significant chance of success.
Nor is it a surprise that we are repeating the exact same mistakes that caused the recession in the first place. Predatory subprime lending may have disappeared in the housing market (for now), but it’s booming in student loans and automobile loans, where stories proliferate of borrowers tricked into contracts they can’t afford.
So you want to know where the next recession will come from? The same place as the last one, just in a different disguise: the rich, savvy few preying on the invisible masses, who never really escaped the last recession, which is why this house of cards cannot stand for long.
For a recovery to last, it must be experienced by all Americans. So far, that’s simply not happening.