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The Wealth Inequality Problem in One Chart

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The Wealth Inequality Problem in One Chart

The Wealth Inequality Problem in One Chart

It’s clear that America’s financial and political systems are broken

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

It seems that people don’t agree on much these days, but there is one growing exception to that rule.

Across the board, Americans are finding that the “system” isn’t working for most people in its current state. Donald Trump and Bernie Sanders have locked into this sentiment to garner unprecedented support as outsider candidates, and there is an undeniable feeling in the air that something has got to give.

Why is there so much conviction that things must change?

The Wealth Inequality Problem

In today’s chart, we showcase the wealth inequality problem in the best way we could. The challenge with it was that literally the data goes “off” the chart with no easy way to show it.

On the chart, we plotted the “Median Net Worth” of different wealth groups between 1998 and 2013. This is based on a study that the Federal Reserve does about every three years on consumer finances.

When this data is compared in 2013 dollars:

  • The Lower Class: Wealth has decreased by 26.5% for the bottom 20% of incomes
  • The Working Class: Wealth has decreased by 52.7% for the second lowest 20% of incomes
  • The Middle Class: Wealth has decreased by 19.1% for the middle 20% of incomes

However, one segment has shot up “off” the charts:

  • The Top 10%: Wealth has increased 74.9%, soaring to a median net worth of over $1.1 million.

Then and Now

What’s changed between then and now?

We looked at this from a macroeconomic perspective to get a sense of what has changed between 1998 and today, using latest data from last month (May 2016).

  • Unemployment is relatively flat between 1998 and today, but the amount of people actively looking for work has dropped by 4.5%. With more workers discouraged since the 2008 crisis, Workforce participation has dropped steadily. Economists also say this is likely due to a rapidly aging population.
  • Inflation has averaged between 0% and 1% over the last three years. It is currently sitting at 1%. In 1998, inflation was closer to the Fed’s 2% target.
  • The Federal Funds Rate, which is the rate that generally acts as a backbone for interest rates across the country, has dropped like a rock. Right now it was effectively 0.37% in May 2016, way down from 5% to 6% that existed for most of the 90s.
  • National Debt has almost quadrupled in nominal terms from $5.5 trillion (1998) to $19.3 trillion today. In real terms, taking into account inflation, it has more than doubled.
  • Money Supply (M2) has increased from $4.2 trillion (1998) to $12.7 trillion today. About $5 trillion of this increase came after the 2008 crisis.

And while there are many factors that go into wealth inequality, we believe that some of the above factors are worth exploring and understanding in detail.

For example, who benefits from 0% interest rates the most?
Who owns assets like real estate or stocks that have their prices propped up by these policies?
Who can borrow capital at low rates to invest or speculate on rises in these prices – is it the people that already have money, or the people without any?
Where does all the extra money that is added to the system go?
What is each $1 trillion of new U.S. debt spent on, and do the benefits of this added debt outweigh the costs?

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U.S. Debt Interest Payments Reach $1 Trillion

U.S. debt interest payments have surged past the $1 trillion dollar mark, amid high interest rates and an ever-expanding debt burden.

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This line chart shows U.S. debt interest payments over modern history.

U.S. Debt Interest Payments Reach $1 Trillion

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

The cost of paying for America’s national debt crossed the $1 trillion dollar mark in 2023, driven by high interest rates and a record $34 trillion mountain of debt.

Over the last decade, U.S. debt interest payments have more than doubled amid vast government spending during the pandemic crisis. As debt payments continue to soar, the Congressional Budget Office (CBO) reported that debt servicing costs surpassed defense spending for the first time ever this year.

This graphic shows the sharp rise in U.S. debt payments, based on data from the Federal Reserve.

A $1 Trillion Interest Bill, and Growing

Below, we show how U.S. debt interest payments have risen at a faster pace than at another time in modern history:

DateInterest PaymentsU.S. National Debt
2023$1.0T$34.0T
2022$830B$31.4T
2021$612B$29.6T
2020$518B$27.7T
2019$564B$23.2T
2018$571B$22.0T
2017$493B$20.5T
2016$460B$20.0T
2015$435B$18.9T
2014$442B$18.1T
2013$425B$17.2T
2012$417B$16.4T
2011$433B$15.2T
2010$400B$14.0T
2009$354B$12.3T
2008$380B$10.7T
2007$414B$9.2T
2006$387B$8.7T
2005$355B$8.2T
2004$318B$7.6T
2003$294B$7.0T
2002$298B$6.4T
2001$318B$5.9T
2000$353B$5.7T
1999$353B$5.8T
1998$360B$5.6T
1997$368B$5.5T
1996$362B$5.3T
1995$357B$5.0T
1994$334B$4.8T
1993$311B$4.5T
1992$306B$4.2T
1991$308B$3.8T
1990$298B$3.4T
1989$275B$3.0T
1988$254B$2.7T
1987$240B$2.4T
1986$225B$2.2T
1985$219B$1.9T
1984$205B$1.7T
1983$176B$1.4T
1982$157B$1.2T
1981$142B$1.0T
1980$113B$930.2B
1979$96B$845.1B
1978$84B$789.2B
1977$69B$718.9B
1976$61B$653.5B
1975$55B$576.6B
1974$50B$492.7B
1973$45B$469.1B
1972$39B$448.5B
1971$36B$424.1B
1970$35B$389.2B
1969$30B$368.2B
1968$25B$358.0B
1967$23B$344.7B
1966$21B$329.3B

Interest payments represent seasonally adjusted annual rate at the end of Q4.

At current rates, the U.S. national debt is growing by a remarkable $1 trillion about every 100 days, equal to roughly $3.6 trillion per year.

As the national debt has ballooned, debt payments even exceeded Medicaid outlays in 2023—one of the government’s largest expenditures. On average, the U.S. spent more than $2 billion per day on interest costs last year. Going further, the U.S. government is projected to spend a historic $12.4 trillion on interest payments over the next decade, averaging about $37,100 per American.

Exacerbating matters is that the U.S. is running a steep deficit, which stood at $1.1 trillion for the first six months of fiscal 2024. This has accelerated due to the 43% increase in debt servicing costs along with a $31 billion dollar increase in defense spending from a year earlier. Additionally, a $30 billion increase in funding for the Federal Deposit Insurance Corporation in light of the regional banking crisis last year was a major contributor to the deficit increase.

Overall, the CBO forecasts that roughly 75% of the federal deficit’s increase will be due to interest costs by 2034.

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