slump brought more inequality

The Wealth Report is a daily blog written by Robert Frank, a senior writer for the Wall Street Journal and in this post he writes that many economists and journalists, himself included, assumed inequality would decline during the global financial crisis. They think the rich tend to reap the most when times are good and lose the most (on a percentage basis) during busts.

However, new calculations by Edward Wolff, the New York University economist and an expert on U.S. wealth statistics, show that the top 1% actually held onto its share of national wealth in the crisis, and may have even gained a bit. According to his analysis, the top 1% held 34.6% of all national wealth in 2007. By Dec. 31, 2009, they held 35.6%.

Meanwhile,the share of national wealth held by the bottom 90% fell to 25% from 27%.

A new online survey by the Harrison Group and American Express of more than 1,900 consumers with more than $100,000 of discretionary income found that more than 50% are optimistic about their future.Fully 94% believe the country is still in recession. Yet affluent and wealthy American consumers see themselves as succeeding in the present economy (75%) but generally judge everybody else as struggling. Harrison Group estimates discretionary spending by the affluent and wealthy will rise by $56 billion in the next year, with $28 billion going to luxury.