Economic recovery only for those in the top 5 percent

For those in the top 5 percent, the recovery has been pretty good. As for the other 95 percent, well … maybe not so much. Post-financial crisis wealth disparity has been well-chronicled.

Federal Reserve Gov. Sarah B. Raskin drew widespread attention with this speech in April that showed how poorly the lower income levels have fared during the recovery, particularly because those demographics have their wealth concentrated in housing and are hit far more severely by falling prices.

The unemployed in lower-income groups also take a hit because they have a more difficult time finding jobs that pay at a rate commensurate with the positions they lost.

Finally, history has shown that highly accommodative monetary policy widens income disparity by awarding speculators and penalizing savers. While the S&P 500 is up nearly 150 percent since the March 2009 lows, that’s most helped those heavily invested in stocks.

The University of California, Berkeley has produced some seminal research on this topic. But this series of charts, put together by Charles Hugh Smith at oftwominds.com, helps put the sharply skewed recovery into perspective. Read more >>

Study shows most Americans have inadequate savings

A recent survey by Bankrate.com shows that millions of American workers are only a paycheck away from financial disaster. A survey of 1,000 adults found that fewer than 25 percent of Americans have six months or more of savings, an amount deemed adequate to prepare for all but the most severe emergencies.

Another 50 percent have less than three months savings and 27 percent have no savings at all, meaning they are living essentially living paycheck to paycheck, with no emergency cushion to fall back on.

The online lender CashNet.com reported that of 1,000 people it recently surveyed, 22 percent had less than $100 saved in case of an emergency. Another 46 percent had less than $800 to cover unexpected expenses. Said Megan Staton, CashNet director of marketing, “The scarcity of rainy day savings remains a concern for too many Americans, and it hasn’t improved since last year.”

These statistics underscore the hollowness of the claim by the Obama administration that the US is experiencing an economic recovery. In fact, the rate at which Americans are saving is falling, after rising briefly in the aftermath of the 2008 financial crisis when it reached a high of 5.5 percent. In 2011, it declined to 4.2 percent and further to 3.9 percent in 2012. For the first quarter of 2013, the savings rate stood at just 2.6 percent. Only 52 percent of families reported saving in 2010 compared to 56.7 percent in 2007.

Stagnant and falling wages and continued high levels of unemployment make it difficult for most families to save. A study by the University of California found that since 2009 average real income for families has grown by only 1.7 percent. But, that includes an 11 percent increase for the top 1 percent. When that is subtracted, real wages declined half a percent for the bottom 99 percent. Read more >>