American Economy

1946 (Post-War Era: End of the Second World War)

  • People born in 1946: Bill Clinton, George Bush, Donald Trump, Dolly Parton
  • A modern era where a lot of economic and political decisions have been made about the structure of the economy.
Year GDP
1946 2 Trillion
2020 20 Trillion

Income

Productivity and typical worker's compensation gap increased post-1979.

Duration Productivity Compensation
1948-1979 +118% +107.5%
1979-2021 +64.6% +17.3%
  • That's a paradox.
  • Where did most of the economy's gains go?
    1. Into business investment.
    2. Into government programs for the poor
    3. To people who were already wealth
    4. Into environmental protections, education, public health, infrastructure, military expenditures and basic research etc.

Since 1980, incomes of the top 1% have grown 7 times faster than the bottom 90%.

Duration Bottom 90% Top 1% Top 0.1%
1979-2017 +22.2% +157.3% +343.2%

Purchasing power has stagnated for the majority of Americans

  • Americans' paychecks are bigger than 40 years ago, but their purchasing power has hardly budged.
  • Average hourly wage in US
Year Current Dollar Constant 2018 Dollar
1946 $2.5 $20.27
1964 $22.65 $22.65
  • "Constant 2018 Dollar": wages adjusted for inflation
  • This has huge social and political implications.

Income growth has changed a lot in the last 30 years

Year Lower income (5th percentile) Higher income (99th percentile)
1980 +3.2% +1.8%
2014 +0% +5%
  • In 1980 most of the growth in income was in lower-income people
    • The poor and middle class used to see the largest income growth.
  • By 2014, the very affluent (the 99.9th percentile) see the largest income growth.
  • This shows a dramatic shift in the structure of the economy.

The suspension bridge

  • Share of total before-tax income flowing to the highest income households (including capital gains), 1913-2017
Year Top 1% Top 0.5%
1912 18% 15%
1920 15% 11%
1929 23% 19%
1930 16% 12%
1946 11% 8%
1979 9% 7%
2017 21% 18%
  • During 1912-1930 (begging of the Great Depression), the top 1% had 18% of the total income of the country.
  • 1946-1979 (Period of greatest degree of equality)
    • Top 1% had the smallest percentage of the total income.
  • After 1979 history cycle repeats making a suspension bridge

We once grew together: Real family income growth (1947-1979)

Duration Lowest Fifth Fourth Fifth Mid Fifth 2nd Fifth Top Fifth
1979-2010 +2.6% +2.5% +2.5% +2.3% +2.3%
  • Unglorifying things about that period:
    • Women were still second-class citizens.
    • Black people and Latinos were still second or third-class citizens.

Then we grew apart: Real family income growth (1979-2010)

Duration Lowest Fifth Fourth Fifth Mid Fifth 2nd Fifth Top Fifth
1979-2010 -0.4% +0.6% +0.3% +0.1% +1.2%

Wealth

Income From Wealth

  • Increase share of income from wealth claimed by top 1%
Year Top 1% 90-99th percentile Bottom 90%
1979 33.5% 30.3% 36.2%
2010 54.0% 23.0% 22.9%

Total Family Wealth by Wealth Group

Year Top 10% 51st to 90th percentile Bottom 50%
1989 40 trillions 14 trillions 1 trillion
2019 110 trillion 28 trillion 2 trillion
  • Most people in the US accumulate almost no wealth relative to the top 1%.

Wealth held by richest 400 Americans (top 0.00025%) as % of total economy

Year Wealth of richest 400 Americans as % of US economy
1980 2%
2000 12%
2020 15%
2021 19%
  • They is not about blaming them. This is simply what has happened.

18 Richest American families' (top 0.00001%) wealth as share of total US economy.

Year 18 Richest families wealth as share of total US wealth
1913 0.85%
1957 0.3%
1984 0.2%
1998 1%
2021 1.4%

Wealth and Income distrubution has a correlate in the politics and in the sociology of the country.

Other

2020: Pandemic Recession

Federal Bank (Fed)

  • Federal Trade Commission (FTC)

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