America’s chasm between haves and have-nots, combined with racial discrimination, came under closer scrutiny in 2020, as the COVID-19 pandemic raged, infecting millions of citizens and exerting pressure intense on mom and pop businesses.
But while stock indexes staged a huge rebound from lows seen in March when the pandemic first hit, the gap between the rich and the poor continued an already growing trend to historic proportions.
A BofA Global Research report released on Friday notes that a measure of the differential between gains in financial assets and the health of the economy hit a record 6.3X in 2020.
U.S. stocks have seen an almost relentless surge this year from lows in March, when the coronavirus pandemic plunged the economy into recession, with the Dow Jones Industrial Average DJIA,
and the S&P 500 SPX index,
both registering spring gains of at least 60% and Nasdaq Composite COMP,
up over 85%.
Indeed, the global epidemic has fattened the wallets of the richest of the rich, with a Business Insider estimate recently showing that a number of top billionaires increased their wealth by more than half a trillion dollars during the coronavirus pandemic, with AMZN from Amazon.com,
Jeff Bezos tops this list with Tesla Inc. TSLA,
CEO Elon Musk.
This increase in wealth came even as more than 20 million Americans, near the peak of the pandemic in the United States in the spring, were at least temporarily put out of work as business closures and redundancies. social distancing were being implemented to limit the spread of COVID. 19.
This is not the first time that the inequality gap has widened dramatically during an economic crisis, as the chasm between rich and poor widened during the 2008 financial crisis as well.
BofA’s brief note offers no solution to the wealth gap, but it is a topic that is increasingly being raised as a major drag on the economy.
A report by Moody’s Investors Service said that income and wealth inequalities, including large income disparities between racial groups, prevent the US economy from reaching its potential and pose a continuing “social risk”.
This inequality is more pronounced in the United States than in other countries, according to the Moody’s report.
A separate report from Citigroup said the cost of this disparity is not insignificant, estimating the global tab for not closing racial gaps on wages, education, housing and investment stands at 16 trillions of dollars.
“Blacks, in particular, appear to have suffered greater job losses due to government-ordered closures; ended up in essential but poorly paid industries; had more pre-existing factors leading to COVID-19 mortality; owned businesses that closed down or were unable to access Paycheck Protection Program loans; and reported high rates of food, income and housing insecurity amid the crisis, ”Citi analysts said.
Lily: Racial wealth gap and other forms of inequality limit U.S. economic strength: Moody’s