Since that day, nearly 43 million Americans have applied for initial unemployment benefits. Low-income workers, especially in the travel and services sectors, have been particularly affected by the health crisis.
The numbers place an exclamation mark on the deep gap between rich and poor that is helping to fuel unrest in the United States. Wealth disparities are likely to further worsen as a result of this crisis, experts say.
The acceleration of wealth for wealthier Americans is driven by the notable recovery in the stock market, which has skyrocketed largely due to unprecedented Federal Reserve action.
“The take-off of the stock market – and the decoupling from the real economy – is aggravating inequality,” said Kristina Hooper, chief strategist of Invesco’s global market.
Big Tech is thriving
Despite the turmoil on the streets of U.S. cities and a record 43 million Americans claiming unemployment benefits, the Nasdaq is on the verge of hitting record highs: a surprising feat that underlines the speed with which Wall Street has rebounded.
The Fed’s emergency response, including cutting interest rates to zero and promising to buy unlimited amounts of bonds, was designed to make risky assets such as stocks more attractive. Investors were essentially forced to bet on stocks – and Big Tech in particular is benefiting from them.
The big tech companies don’t survive only during the pandemic, many of them are thriving. The crisis has made Amazon, for example, even more essential than it already was. Amazon stocks rose 47% from their mid-March lows.
also quickly recovered to record highs. The net worth of Mark Zuckerberg, the company’s co-founder and CEO, has risen $ 30.1 billion since March 18, according to the IPS report.
The report calculated billionaire wealth using data provided by Forbes’ list of global billionaires, a real-time assessment of equity. March 18 is used as the start date because that is the date linked to Global Billionaire 2020 survey in Forbes
. It also roughly matches when the United States and the federal government started imposing health restrictions.
Other tech players have also accumulated more wealth in the past three months. The equity of Tesla (TSLA)
chief Elon Musk, Google founders Sergey Brin and Larry Page and ex Microsoft (MSFT)
CEO Steve Ballmer has gone up $ 13 billion or more each since March 18, according to the report.
Unemployment could soon reach almost 20%
In the meantime, the United States has been hit by mass unemployment caused by social exclusion requirements imposed to combat the pandemic.
Economists expect Friday’s jobs report to show that the United States lost another 8 million jobs in May, bringing the pandemic count to 28.5 million – three times the number of jobs lost during the Great Recession. The unemployment rate is expected to rise to nearly 20%, higher than it has been since the Great Depression.
“The increase in billionaire wealth versus the suffering and suffering of millions undermines the social solidarity needed to recover together in the years to come,” said Chuck Collins, co-author of the IPI report.
Of course, millions of average Americans are also benefiting from the V-shaped recovery in the stock market. The rebound has increased the value of investment portfolios, pension funds and pension accounts. Even just betting on a vanilla fund that tracks the S&P 500 would have given investors an orderly return of nearly 40% from the March 23 lows.
About 52% of households owned shares directly or indirectly through retirement plans such as 401 (k), according to 2016 Federal Reserve statistics.
Yet a rising stock market helps the wealthy more than the rest of the country. This is because the top 10% of families owned 84% of all shares in 2016
, according to Professor Edward Wolff of New York University.
These trends help explain the unrest that has gripped the United States. Although the initial catalyst was police brutality, protests and riots are taking place in a nation divided between racial and economic lines. And those fault lines seem to grow during the pandemic.
“You have a combustible mix of income loss and inequality,” said Joe Brusuelas, chief economist at RSM International.