Tuesday, June 30, 2015

Even with its best year of the Millennium, the bottom 99% only received58% of total income growth in 2014


 - by New Deal democrat

Prof. Emanuel Saez of Berkeley has updated  his income inequality data for the US with preliminary estimates for 2014.  The data, as per the accompanying graphs, shows that the top 10% gathered close to 50% of all income, just as they have for most of the past decade:



Even more striking, the top  1% continue to pull away from the remaining 99%:



But I think Saez buries the lede on this story, because 2014 was the best year since the late 1990s regarding the growth in real income for the bottom 99%.  He reports that from the 2009 recession bottom through 2013, the top 1% scored 91% of all real income improvement, with the entire bottom 99% taking only 9% of the gains. From 2009 through 2014, however, he reports that the top 1% got 58% of cumulative growth:



So, how much of the real income growth go to the bottom 99% vs. the top 1%?  Saez doesn't say.

But by making use of Saez's earlier data on the average income of the bottom 99% ($44,997) and the top 1% ($1,119,315) in 2013,  and the percent each grew in 2014 (+3.3% and +10.8%, respectively), we can calculate this.

In their best year for average income growth (+$1,684 ) in this Millennium, the bottom 99% only received 58% of all income paid.  The top 1% (whose incomes grew by $120,836 on average) took the entire remaining 42% of real income growth in 2014. 

Keep in mind that 2014's income growth wasn't because employers suddenly got generous with wage increases -- they only averaged about 2% -- but rather because the price of gasoline collapsed, causing inflation to completely disappear.  And even with that boost, the top 1% still took 42% of all growth.  There is simply something deeply wrong with an economic system that generates that kind of disparity, even when the bottom 99% is having their best year in several decades.

Monday, June 29, 2015

Memo to the EU: Just How Much More Pain Can Greece Take?

Without weighing in on the political argument about the Greek situation, consider these charts that show the overall macro level Greek situation.

 
 
At constant prices, overall Greek GDP has contracted by ~1/4 since 2008.
 
 


They've been in a near constant contraction.



Austerity hasn't worked; the debt/GDP ration has spiked from 112% to 171%.


The unemployment rate is a little over 25%.

Just what exactly is left to cut?