Since that day, about 43 million Americans have applied for initial unemployment benefits. Low-income workers, especially in travel jobs and the service sector, have been hit hard by the health crisis.
The numbers put an exclamation point on the deep divide between the haves and the have-nots that helps fuel unrest across the United States. Experts say wealth inequality is likely to get worse due to this crisis.
The acceleration of wealth for the wealthiest Americans is driven by the notable recovery of the stock market, which has increased significantly due to unprecedented measures by the Federal Reserve.
“Taking off the stock market – and detaching it from the real economy – is exacerbating inequality,” said Christina Huber, chief global strategist at Invesco.
Big Tech is thriving
Despite street turmoil in American cities and record 43 million Americans record for unemployment benefits, the Nasdaq is on the verge of record highs – a startling achievement that confirms how quickly Wall Street is recovering.
The Fed’s emergency response, including cutting interest rates to zero and the promise to purchase unlimited amounts of bonds, is designed to make risky assets like stocks look more attractive. Investors are essentially forced to gamble on stocks – Big Tech in particular benefits from this.
Big tech companies are not only alive during the epidemic – many of them are booming. The crisis has made Amazon, for example, more important than it really was. Amazon stocks rose 47% from their mid-March lows.
Facebook social networking site (Php)
He also recovered quickly to set records. The IPS report concluded that the net worth of Mark Zuckerberg, co-founder and CEO of the company, has increased $ 30.1 billion since March 18.
The report calculated billionaires ‘wealth using the data provided by Forbes’ global billionaires list, which is a real-time assessment of net worth. March 18 is used as the start date because this is the date associated with 2020 Forbes Global Billionaire Survey
. It also roughly coincides with the time the United States and the federal government began imposing health restrictions.
Other tech power players have accumulated more wealth over the past three months. Net worth Tesla (TSLA)
Its boss, Elon Musk, and Google co-founders Sergey Brin, Larry Page and ex Microsoft (MSFT)
The report concluded that CEO Steve Ballmer has increased by $ 13 billion or more since March 18.
Unemployment may soon reach 20%
Meanwhile, the United States has suffered from mass unemployment caused by the social divergence requirements imposed on fighting the epidemic.
Economists expect the jobs report on Friday to show that the United States lost another 8 million jobs in May, bringing the number of pandemic 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%, which is higher than it has been since the Great Depression.
“Increasing the wealth of billionaires coupled with the suffering and plight of millions undermines the social solidarity needed to recover together in the coming years,” Chuck Collins, co-author of the IPI report, said in a statement.
Of course, millions of ordinary Americans also benefit from the V-shaped recovery in the stock market. The recovery has raised the value of investment portfolios, pension funds and pension accounts. Even just betting on the Vanilla Fund tracks the S&P 500 index would have given investors a salary close to 40% since its lows on March 23.
About 52% of families own shares directly or indirectly through retirement plans such as 401 (k) seconds, according to 2016 statistics from the Federal Reserve.
However, the stock market rally is helping the rich more than the rest of the country. This is because the top 10% of families It owns 84% of all shares in 2016
, According to New York University professor Edward Wolf.
These trends help explain the turmoil in the United States. Although the initial motivation was police brutality, protests and riots are taking place in a country divided along ethnic and economic lines. These fault lines appear to grow during the epidemic.
“You have a flammable mixture of income loss and inequality,” said Joe Brosuelas, chief economist at RSM International.