The Richest Year in History

Billionaires have it made.So what's new? What's new is that there are lots more of them and they're a lot richer. The number of billionaires around the world grew by 19 percent since last year, up to 946, with a total net worth increasing by 35 percent to $3.5 trillion, according to a report released by Forbes magazine. That's trillion with a "T."

Says Forbes Chief Executive Steve Forbes: “This is the richest year ever in human history. Never in history has there been such a notable advance.”

Of course this historic advance is largely confined to those who were already mind-bogglingly rich to begin with. For working people as a whole, there’s at best a holding action and at worst a retreat. Let’s look at the figures without Steve Forbes’ rose-colored glasses.

According to the Center on Budget and Policy Priorities:

From 2003 to 2004, the average incomes of the bottom 99 percent of households grew by less than 3 percent, after adjusting for inflation. In contrast, the average incomes of the top one percent of households experienced a jump of more than 18 percent, after adjusting for inflation.

In fact, it’s worse than that. The CBPP explained that the enormous gains at the top of the income pyramid caused a rise of income as a whole. But median income dropped between 2003 and 2004, and has not risen appreciably since then. In short, while the rich get richer, the middle class is shrinking, as economist Paul Krugman has pointed out.

Other economic indicators also show a less rosy scenario for working, such as the drop in construction jobs, which fell by 62,000 in February, after posting a net gain of 28,000 in January, according to recent data from the U.S. Bureau of Labor Statistics. As The Bonddad Blog notes,

The housing slowdown is starting to hit employment numbers. I would expect this number to continually worsen over the next year as the housing slowdown starts to bleed into the rest of the economy.

Manufacturing jobs took another hit in January as well, dropping by 14,000. Overall, private-sector jobs showed only a net gain of 58,000, its lowest monthly gain since November 2004. Public-sector job increases kept January’s job numbers from tanking, by adding 39,000 jobs, for a total increase of 97,000 jobs.

As the Economic Policy Institute notes, the job market remains tight and wage growth solid. (After nearly four years of stagnant wage growth, wages recently have shown some signs of life.) But the nonprofit group also says recent data show troublesome signs, such as slowing growth in the number of hours worked and a 1.7 percent spike in long-term unemployment. Plus real gross domestic product growth, with only a 2.2 percent fourth quarter increase, did not rise nearly as fast as in previous quarters.

As noted by the Center for Economic and Policy Research , even if the decline in hours worked was weather-related, it is worthy of note that this is the largest one-month decline since June 2004.

Even workers who own homes are losing. Exotic and subprime mortgagees are getting hit with new monthly payments they can’t afford. Some 20 percent of subprime loans at the biggest U.S. mortgage lender, Countrywide Financial, are more than 60 days late and late payments are increasing in the non-subprime mortgage markets.

So what does it all mean? Even if Bush wasn’t in Brazil peddling alternative fuels for South America while we pay higher and higher prices for fuel oil, the economy looks a lot better from the top.