‘The recovery has been disappointing’

Wealth gap widens as means have shrunk

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Marcio Jose Sanchez / Associated Press

Hannah Moore, 37, has struggled to save due to the high cost of living in Los Angeles and student debt.

WASHINGTON — As it enters its 11th year, America’s economic expansion is now the longest on record — a streak that has shrunk unemployment, swelled household wealth, revived the housing market and helped fuel an explosive rise in the stock market.

Yet even after a full decade of uninterrupted economic growth, the richest Americans now hold a greater share of the nation’s wealth than they did before the Great Recession began in 2007. And income growth has been sluggish by historical standards, leaving many Americans feeling stuck in place.

Those trends help explain something unique about this expansion: It’s easily the least-celebrated economic recovery in decades.

America’s financial disparities have widened in large part because the means by which people build wealth have become more exclusive since the Great Recession.

Fewer middle-class Americans own homes. Fewer are invested in the stock market. And home prices have risen far more in wealthier metro areas on the coasts than in more modestly priced cities and rural areas. The result is that affluent homeowners now sit on vast sums of home equity and capital gains, while tens of millions of ordinary households have been left mainly on the sidelines.

“The recovery has been very disappointing from the standpoint of inequality,” said Gabriel Zucman, an economist at the University of California, Berkeley, and a leading expert on income and wealth distribution.

Household wealth — the value of homes, stock portfolios and bank accounts, minus mortgage and credit card debt and other loans — jumped 80 percent in the past decade. More than one-third of that gain — $16.2 trillion in riches—went to the wealthiest 1percent, figures from the Federal Reserve show. Just 25 percent of it went to middle-to-upper-middle class households. The bottom half of the population gained less than 2 percent.

Nearly 8 million Americans lost homes in the recession and its aftermath, and the sharp price gains since then have put ownership out of reach for many would-be buyers. For America’s middle class, the homeownership rate fell to about 60 percent in 2016 from roughly 70 percent in 2004, before the housing bubble, according to separate Fed data.

Hannah Moore, now 37, has struggled to save since graduating from college in December 2007, the same month the Great Recession officially began. She has worked nearly continuously since then despite acouple of layoffs.

Moore says she could afford amonthly mortgage payment. But she lacks the savings for a down payment. About half her income, she calculates, is eaten up by rent, health insurance and student loan payments of $850 amonth.

As financial inequalities have widened over the past decade, racial disparities in wealth have worsened, too. The typical wealth for a white household is $171,000 — nearly 10 times that for African-Americans. That’s up from seven times before the housing bubble, and it primarily reflects sharp losses in housing wealth for blacks. The African-American homeownership rate fell to a record low in the first three months of this year.