The economy seems to be doing well. The market is up, unemployment is down, and our tax burdens are shrinking.
Sounds great, right?
Yes, but – and there’s always a “but” – many Americans are not benefiting from the economic growth.
One reason is that the middle class is shrinking. Households in the U.S. have a cumulative net worth of $100 trillion. But most of that belongs to the affluent.
The top 10 percent of earners hold 73 percent of all the wealth. Since 1986, that’s gone up, and the top 1 percent of earners have benefitted most – 39 percent of all the wealth in the nation belongs to them.
In 1986, the middle class had 36 percent of the total wealth. Today it’s at 27 percent. And the bottom 40 percent of earners have a negative net worth and little to no financial savings.
Rising gas prices are another reason. Estimates indicate that the higher cost of gas will eat away up to a 33 percent of the savings from President Trump’s tax cuts.
A third trend removing wealth from Americans’ pockets is the high cost of child care. Parents know that kids can be quite expensive. Today, child-related costs swallow 20 percent of annual income, on average.
And lastly, while more people are able to buy homes, supply is low and demand is high. That means people are being priced out of the market. On top of that, mortgage rates are rising, so home ownership will cost more in the future.
Given all that, it’s not hard at all to see why many Americans aren’t benefitting from economic growth.