Rich get richer as economy gets better; everyone else is worse off

[CountDeMoney]

Fuck it, I'm going out for smokes.  Maybe play some scratch offs.

[MadImmortalMan]

It looks to me like spike in house prices is very localized.  Just a few markets.

Yes it is. Mostly the markets that were hardest-hit by the bubble.

If it does get back to even I don't expect it to keep skyrocketing, because the main reason for the undersupply that's causing prices to rise is the fact that so many properties are underwater. Once that condition goes away, lots of "trapped" inventory will be able to float again.

[DGuller]

Bottom line: the "rich" diversify asset classes (real estate plus equities, etc.); the "non-rich" who own assets, mostly own real estate alone. Diversification has, predictably enough, done better.

Not predictably enough, actually.  Diversification doesn't really "ensure" high return.  It "ensures" optimal return for the level of risk taken, with that return in reality being about average.  If you're not diversified, your asset value can make a huge jump not just down, but also up.

[crazy canuck]

Bottom line: the "rich" diversify asset classes (real estate plus equities, etc.); the "non-rich" who own assets, mostly own real estate alone. Diversification has, predictably enough, done better.

Not predictably enough, actually.  Diversification doesn't really "ensure" high return.  It "ensures" optimal return for the level of risk taken, with that return in reality being about average.  If you're not diversified, your asset value can make a huge jump not just down, but also up.

Unfortunately for everyone the asset that most were holding - real estate - went down not up.

[merithyn]

According to the article linked to the table you posted ...

The biggest difference between the most affluent group and everyone else, Pew said, is that the wealthiest households have their assets concentrated in stocks and other financial instruments, while others' wealth is concentrated in their homes.

Both stock and home values were pummeled during the recession. But in the recovery, stock values have rebounded nicely and have reached new highs. Housing values — particularly for those living in nonexclusive areas — have stayed mostly flat, although there have been some stirrings of a recovery in the past year.

Bottom line: the "rich" diversify asset classes (real estate plus equities, etc.); the "non-rich" who own assets, mostly own real estate alone. Diversification has, predictably enough, done better.

This falls in line with what fahdiz said. Basically, only the rich had the money in order to buy the stocks. In general, people use buying stocks as a place to park their savings. If you're living paycheck to paycheck or you need to have your money in an easier-access account, stocks just aren't an option. So, it was, if not impossible highly improbable that middle-class Americans would have been in a position to benefit from this.

[Admiral Yi]

Meri, not really sure that living paycheck to paycheck describes your typical middle class household.

[The Minsky Moment]

So people should save more.

Savings come out of income.  And middle class income is stagnating as well.

[derspiess]

So, it was, if not impossible highly improbable that middle-class Americans would have been in a position to benefit from this.

  I'm very middle class and am benefiting from it-- at least my 401k is.

[Admiral Yi]

Savings come out of income.  And middle class income is stagnating as well.

Either they can save more or they can expect their net worth to stagnate.

[mongers]

Savings come out of income.  And middle class income is stagnating as well.

Either they can save more or they can expect their net worth to stagnate.

So you have stock markets at near historic highs, built in part on the back of a unprecedented consumer boom. And now you're advocating people take their money 'out' of the economy, so they can rebuild their assets; what could possibly go wrong ?

[Ed Anger]

Fuck it, I'm going out for smokes.  Maybe play some scratch offs.

Use that money to buy Toaster Studel.

[MadImmortalMan]

We have an unprecedented consumer boom?

[mongers]

We have an unprecedented consumer boom?

Note past tense. 

How else would you describe that surprising change over the last 30+ years in one aspect of the economy ?

[Admiral Yi]

So you have stock markets at near historic highs, built in part on the back of a unprecedented consumer boom. And now you're advocating people take their money 'out' of the economy, so they can rebuild their assets; what could possibly go wrong ?

Why are you addressing this question to me, rather than Meri, who is the one who raised a concern about decreasing net worth?

Every single economic choice has negative and positive repercussions.  Savings rate is not unique in that regard.

[MadImmortalMan]

We have an unprecedented consumer boom?

Note past tense. 

How else would you describe that surprising change over the last 30+ years in one aspect of the economy ?

Oh I thought you meant right now. Carry on.