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Wednesday, March 9, 2011

As wealthiest 5% get richer, the Middle Class feels the pinch

From Salon:

What a difference two years makes. On March 9, 2009 the Dow Jones Industrial Average hit the bottom -- closing at a 12-year low of 6,547. Today the Dow is soaring well over 12,000.

From its peak in October, 2007 until its trough two years ago, the stock market lost almost $8 trillion in value. That value hasn't been completely restored but the Street is well on the way.

Some say the Street's buoyant revival should pull the rest of the economy with it. But this is hardly a buoyant recovery.

In theory, at least, the extraordinary bull market should be making Americans feel far wealthier than they felt two years ago. So they should be spending far more, and that spending should be fueling far more job growth than it is.

Why hasn't it happened? In reality, the vast majority of Americans don't feel wealthier because they hold few if any shares of stock. In fact most feel poorer because their major asset is their homes -- now worth 20 to 40 percent less than they were worth in 2007 (and there's no sign of a rebound in housing).

The Street's bull market over the last two years has seriously enriched only the wealthiest 5 percent of Americans who hold the lion's share of stock. While their earned income starts at $210,000, their unearned income -- dividends and capital gains -- now puts them considerably above that.

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