By now it is a well-known fact that the Fed’s monetary policies over the past 5 years (and really ever since Greenspan unleashed the Great Moderation) have been very successful at one thing: transferring wealth from the US (and global) middle class and handing it over to the already wealthiest strata of society, either through financial repression, zero savings rates, or generally boosting financial asset values, which as we showed hit a record $63.9 trillion in Q3, or over 70% of total. However, just like the general public’s attention is focused on the quantitative components of the monthly payroll number and completely ignores the qualitative gains or losses in the US labor force, so the broad definition of “middle class” leaves quite a bit to be desired. So what happens if one quantizes society instead of by class with wealth of income cutoff ranges but instead by age? In that case, one gets the following chart prepared by the Urban Institute showing the change in net worth in the period 1983-2010 by age group.
The discrepancy summarized:
Young adults’ ability to grow their personal assets over the past 30 years has decreased considerably. Average wealth for individuals in their 20s and 30s dropped 7 percent from 1983 to 2010, while those 74 and over have seen wealth increase by 149 percent in the same time period. Figure 7 highlights the substantial changes in net worth by age, showing that Millennials today are financially worse off than their parents were at the same age
It is meaningless to make ethical judgments based on the above chart, however the data does confirm one of the most troubling hurdles before any dreams of a virtuous economic recovery can be realized: because it is the younger age groups that drive household formation, and are responsible for the bulk of organic demand for homes – that so critical, missing variable in what would be a true housing recovery (instead of merely using houses as flippable hot potato assets whereby one investor sells homes to another investor with no intention of occupying, in the process making that entry-level home ever more unaffordable for the average young American).
And a question: in a society increasingly torn by conflicts (some of which as if created on purpose): by social status, by race, by ethnicity, by gender, and so many more, how long until one can add age as an ever growing source of social discontent?