The uneven economic recovery

I've certainly written here before about my belief that the policies which have been enacted--both by Congress and by the Fed--in response to our economic crisis have disproportionately benefited the interests of the rich and the corporate, at the expense of the poor (and the retired on fixed incomes).

Earlier this week, I came across an interesting item (and graphic) from the New York Times which gave a further indication of the impact of these policies.

Americans are becoming more optimistic about the prospects for the economy, but are still concerned about their own financial situation.

For the first time in six years, at least half of Americans questioned for the Thomson Reuters/University of Michigan consumer sentiment index said they believed that business conditions had improved over the previous year, according to the preliminary results from the February survey...

Before the recent downturn, only once — in early 1980, during a sharp recession accompanied by high inflation — has a majority said their families were worse off financially than they had been a year earlier. But a majority felt that way for all but one of 18 consecutive months beginning in mid-2008, as the financial crisis took hold.

Even now, 37 percent say they are worse off, compared with just 28 percent who think they are doing better.

In the past, there were only a few times when an absolute majority of people thought they would not be able to keep up with inflation over the next year, and before the financial crisis, all of those times came when inflation was high. But now, 53 percent feel that way, while a record-low 8 percent think their income will rise faster than prices.

The reason for that seems to be largely based on worries about income rather than prices. Although expected inflation rates have been rising, a majority still expect prices to rise by 4 percent or less.

Regardless of what Ben Bernanke says about inflation, it's clear that the impact on the typical American family has been devastating. Despite the steady improvement in summary economic statistics, the gains simply have not been equally shared. That's why you see charts like these, and persistent pessimism in polls like these even when people see the general situation improving.

Economic "recoveries" that are built on inflationary policies will always leave the majority of Americans behind, while disproportionately benefiting a very small subset of the richest of the rich. One of the only reasons that we are not seeing widespread riots in America (like we saw in Egypt, where inequality and inflation were primary driving factors behind the rebellion) is that so many Americans are in fact delusional--they don't realize how unequal we really are, as this post expertly points out.

Sooner or later, as already happened in 2008, the majority of Americans will realize that they have been scammed by Bernanke, et al. GDP statistics may be improving, but the reality--that more and more Americans seem to be waking up to--is that most Americans are getting effectively poorer, not richer. And those who really are getting richer certainly aren't sharing.

[New York Times]