Since that day, nearly 43 million Americans have applied for initial unemployment benefits. Low-income workers, especially in travel and jobs in the service sector, have been particularly affected by the health crisis.
The numbers put an exclamation point on the deep divide between the haves and the have-nots that is helping to fuel the unrest in the United States. According to experts, wealth inequality is likely to worsen further due to this crisis.
The acceleration of wealth for the wealthiest Americans is being driven by the remarkable recovery in the stock market, which has soared in large part due to unprecedented action by the Federal Reserve.
“The take-off of the stock market, and the decoupling of the real economy, is exacerbating inequality,” said Kristina Hooper, chief global market strategist at Invesco.
Big Tech is prospering
Despite the turmoil on the streets of US cities. USA And the record-breaking 43 million Americans filing for unemployment benefits, the Nasdaq is poised to hit record levels, a surprising feat that underscores how quickly Wall Street recovered.
The Federal Reserve’s emergency response, including lowering interest rates to zero and promising to buy unlimited amounts of bonds, was designed to make risky assets like stocks look more attractive. Investors have essentially been forced to bet on stocks, and Big Tech in particular is benefiting from that.
Big tech companies are not only surviving during the pandemic, but many of them are thriving. The crisis has made Amazon, for example, even more essential than it already was. Amazon shares have risen 47% from their mid-March lows.
Facebook (full board)
It also quickly recovered to record levels. The net worth of Mark Zuckerberg, the company’s co-founder and CEO, has increased $ 30.1 billion since March 18, according to the IPS report.
The report calculated billionaire wealth using data provided by the Forbes Global Billionaires List, a real-time assessment of net worth. March 18 is used as the start date because that is the date linked to the Forbes 2020 Global Billionaire Survey
. It also roughly coincides with when the US states. USA And the federal government began to impose health restrictions.
Other tech power players have also accumulated more wealth in the past three months. The net equity of Tesla (TSLA)
boss Elon Musk, Google founders Sergey Brin and Larry Page and former Microsoft (MSFT)
CEO Steve Ballmer has risen by $ 13 billion or more each since March 18, according to the report.
Unemployment could soon reach almost 20%
Meanwhile, the United States has been plagued by mass unemployment caused by the social distancing requirements imposed to combat the pandemic.
Economists expect Friday’s jobs report to show the United States lost another 8 million jobs in May, bringing the pandemic number to 28.5 million, three times the number of jobs lost during the Great Recession. The unemployment rate is expected to rise to almost 20%, more than it has been since the Great Depression.
“The growing billionaire wealth juxtaposed with the suffering and plight of millions undermines the social solidarity required for us to recover together for years to come,” Chuck Collins, co-author of the IPI report, said in a statement.
Of course, millions of average Americans are also benefiting from the V-shaped recovery in the stock market. The rebound has raised the value of investment portfolios, pension funds and retirement accounts. Even betting on a vanilla fund that tracks the S&P 500 would have given investors an orderly return of almost 40% from the lows on March 23.
About 52% of families owned shares directly or indirectly through retirement plans like 401 (k) s, according to 2016 Federal Reserve statistics.
However, a rising stock market helps the wealthy more than the rest of the country. That’s because the top 10% of households owned 84% of all shares in 2016
, according to New York University professor Edward Wolff.
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 on racial and economic lines. And those failures seem to be growing during the pandemic.
“You have a fuel mix of income loss and inequality,” said Joe Brusuelas, chief economist at RSM International.