The Bifurcated Economic Recovery

Bifurcated by definition means divided into two parts and happens to be a great way to describe our economy’s supposed recovery. The National Bureau of Economic Research announced on September 20, 2010 that the 2008/2009 recession ended in June 2009 – making it the longest recession in this country since World War II. I’m sure a lot of people would disagree that the recession has ever ended because millions of employable people still don’t have jobs, many have exhausted unemployment benefits, some are working multiple part-time jobs, and some are just off the radar for a number of reasons. But the S&P 500, a major gauge of the US Stock Market, is up over 98% from its March 2009 low. What’s happening here? Why are so many Americans still having problems? Housing is still a drag on the economy for sure. Many businesses that are tied to housing are still struggling and it sure doesn’t feel like this so called recovery is very widespread.

To be sure, and I’d mentioned this in my post of Feb. 2, 2012, the senior executives of many public companies are doing well, consistent with the returns of the S&P 500, because their compensation packages are tied to their stock, and perhaps large shareholders of these companies are doing well, but, 83% of the wealth is owned by the top 20% income percentile. All the liquidity that the Federal Reserve has put into the economy with stimulus and QE1 and QE2, (2 rounds of quantitative easing was basically the government buying its own treasury securities to keep long term interest rates down) has buoyed the stock market, but as you might ascertain from what I’m writing, only high income earners with exposure to financial assets (stocks and similar securities) are participating. Mainstream America continues to struggle.

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