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Even as Americans grew richer, inequality persisted
[NEW YORK] American families shored up their savings substantially between 2016 and 2019, according to US Federal Reserve data released on Monday, but wealth inequality remained stubbornly high - and that was before the coronavirus pandemic took hold.
Median net worth climbed by 18 per cent in those three years, the Fed's Survey of Consumer Finances showed, as median family income increased by 5 per cent.
The survey, which began in 1989, is released every three years and is the gold standard in data about the financial circumstances of households. It offers the most up-to-date and comprehensive snapshot of everything from savings to stock ownership across demographic groups.
The figures tell a story of improving personal finances fuelled by income gains and rising home prices, the legacy of the longest US economic expansion on record, one that had pushed the unemployment rate to a half-century low and bolstered wages for those earning the least.
Yet many Americans had less in savings than they did before the last recession a decade ago and yawning gaps persisted - the share of wealth owned by the top 1 per cent of households was still near a three-decade high.
Nearly all of the data in the 2019 survey were collected before the onset of the coronavirus. Economists worry that progress for disadvantaged workers has probably reversed in recent months as the pandemic-related shutdowns threw millions of people out of work.
Employment remains sharply depressed compared with before the pandemic, leaving many households in a more precarious position.
Stock market indices have rebounded, which should help to support household wealth, but the benefits will mostly accrue to the rich. Only about half of Americans hold stocks, the survey showed.
"Without a doubt, it will worsen," Julia Coronado, founder of MacroPolicy Perspectives and a former Fed economist, said of inequality.
"We know that the skew of the unemployment is toward lower-income, more economically vulnerable people."
In 1989, the top 1 per cent of wealth holders held about 30 per cent of the nation's net worth. That had jumped to nearly 40 per cent in 2016 and was little changed in the latest survey, Fed economists said.
While wealth did climb slightly for those in the bottom half of the distribution, the poorer half of American families held just about 1 per cent of the nation's savings in 2019, the Fed data and a related report showed.