Wealth Distribution Analysis (Ritholz, 4 min read)
In this piece, Barry Ritholz of Ritholtz Wealth Management LLC. debunks US hyperbolic campaign slogans. Whether an incumbent like Treasury Secretary Steven Mnuchin or a challenger like Representative Alexandria Ocasio-Cortez, when it comes to economic performance on income, tax, and inequality, you can fit the numbers to your viewpoint. America is certainly at its wealthiest ever – net assets are at an all-time high at just over $100tn with very manageable debt levels. All is well if you happen to be in the top 10% that hold $75tn of all assets (c.70% of wealth), but as this article explores, the other side of the coin is not so shiny. The bottom 50% hold a mere $6tn of assets, reflecting a wealth of only $100k per household (c.1.3% of wealth). To add insult to injury, the bottom deciles bear most of the total liabilities, too.
Why does this matter? Raegan’s legacy of supply side economics – driven by taxing the rich less and hoping for the growth boost to trickle down to everyone – didn’t work so well. Both wealth and income inequality have increased to extreme levels, which will be an important topic of debate during the incoming presidential election cycle. This could mean the possibility of wealth taxes or anti-trust actions.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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