How does the US achieve a sustained recovery if “the 99%” continues to suffer perpetual decline in real income?
by Eric Sprott & David Baker, Sprott Asset Management
Other than some obligatory arrests for disorderly conduct, the Occupy
Wall Street movement celebrated its one year anniversary this past
September with little fanfare. While the movement seems to have lost
momentum, at least temporarily, it did succeed in showcasing the growing
sense of unease felt among a large segment of the US population – a
group the Occupy movement shrewdly referred to as “the 99%”. The 99%
means different things to different people, but to us, the 99%
represents the US consumer. It represents the majority of Americans who
are neither wealthy nor impoverished and whose spending power makes up
approximately 71% of the US economy. It is the purchasing power of this
massive, amorphous group that drives the US economy forward. The
problem, however, is that four years into a so-called recovery, this
group is still being financially squeezed from every possible angle,
making it very difficult for them to maintain their standard of living,
let alone increase their levels of consumption.
One of the central themes that arose out of the Occupy movement was
the growing sense of unease among the average American citizen with
regard to growing imbalances in wealth within the US. The rich are
getting richer while the poor get poorer. That feeling is entirely
legitimate. According to the US Census Bureau, in 2011 the median income
of US households, adjusted for inflation, fell to $50,054. This is 4.9%
below its 2009 level, and 8.9% below its all-time peak of $54,932 in
1999.1 This is not encouraging data. It implies that the
average American household is almost 9% poorer today than it was
thirteen years ago. (more)
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