The acceleration of wealth for the richest Americans triggers a remarkable recovery in the stock market, which has risen sharply in large part due to unprecedented actions by the Federal Reserve.
“The stock market and separation from the real economy exacerbates inequality,” said Christina Hooper, chief global market strategist at Invesco.
Big Tech succeeds
The Fed’s immediate response, including cutting interest rates to zero and promising to buy unlimited amounts of bonds, was designed to make risky assets like stocks look more attractive. Investors have basically been forced to gamble on stocks – and Big Tech in particular benefits from that.
Unemployment could soon reach almost 20%
The United States, meanwhile, has been hit by mass unemployment caused by social distancing demands imposed to fight the pandemic.
“The growing wealth of billionaires associated with suffering and million-dollar suffering undermines the social solidarity needed to recover together in the years ahead,” Chuck Collins, co-author of the IPI report, said in a statement.
Of course, millions of average Americans are also benefiting from the recovery of the V-shaped stock market. The improvement has raised the value of investment portfolios, pension funds and pension accounts. Even betting on the vanilla fund that accompanies the S&P 500 would bring investors a neat return of almost 40% of the lowest costs on March 23rd.
About 52% of families had supplies directly or indirectly through retirement plans such as 401 (k) s, according to data from the Federal Reserve.
These trends help explain the unrest that has gripped the United States. Although the initial catalyst was police brutality, protests and riots take place in a nation divided on racial and economic grounds. These fault lines appear to increase during a pandemic.
“You have a flammable plant of lost income and inequality,” said Joe Brusuelas, chief economist at RSM International.