Monday, October 13, 2025
For Many, This Recession Will Feel Like a Depression
charleshughsmith.substack.com
The conventional means to drag the economy out of recession have all reached their limits and will no longer work as anticipated.
We’re often told this time it’s different, and this time, it’s true--but not in the way those issuing the claim expect.
I’m often dismissed as a doomer, and I interpret this as a reflection of the accusers’ intense commitment to The Fairy Tale version of the economy, in which a new technological or financial “innovation” enables us to consume more of everything forever and ever.
As you’ll see, what’s presented here are data--facts. How we interpret them is up to us, and this explains the profound need of apologists to distort or ignore the data to follow The Fairy Tale narrative.
The primary means of distorting data is to lump all 135 million US households / 340 million residents into one bucket. In doing so, we magically make unprecedented wealth and income inequality disappear: look at the vast pool of cash sitting in money market funds, look at the trillions of home equity, 401K accounts, and so on: we’re rich, so what’s the worry?
But this is artifice: the vast majority of this wealth (68%, $113 trillion) is in the hands of 13.5 million households, the top 10%. The bottom 50%--170 million people--own 2.5% of the wealth--$4 trillion, a wafer-thin 3.5% of the wealth held by the top 10%.
According to an article in the Wall Street Journal (April, 2025, WSJ.com, $1 Trillion of Wealth Was Created for the 19 Richest U.S. Households Last Year), 19 households own $2.6 trillion in net worth, the same as 110 million Americans.
The top 1% (3.4 million people) own 31% of all net worth ($52 trillion), more than the net worth of all those in the 50% to 90% segment (136 million people).
The top 10% collect the lion’s share of all income and account for 50% of all spending.
It’s been reported that 41.7 million American workers (31% of the workforce) earn under $12 an hour. A brookings.edu report (2020) found that the median hourly wage of 53 million American workers (ages 18-64, 44% of the workforce) is $10.22, and their full-time annual incomes are about $24,000.
Many of the lowest-paid workers have received a significant bump up in wages, but even a 10% to 20% increase barely moves the needle when we consider that the median full-time wage earnings in the US are $62,000.
I presented all this data in The Winners and Losers in 21st Century America. The real story of the US economy over the past 50 years is not The Fairy Tale narrative.
I’m often dismissed as a doomer, and I interpret this as a reflection of the accusers’ intense commitment to The Fairy Tale version of the economy, in which a new technological or financial “innovation” enables us to consume more of everything forever and ever.
As you’ll see, what’s presented here are data--facts. How we interpret them is up to us, and this explains the profound need of apologists to distort or ignore the data to follow The Fairy Tale narrative.
The primary means of distorting data is to lump all 135 million US households / 340 million residents into one bucket. In doing so, we magically make unprecedented wealth and income inequality disappear: look at the vast pool of cash sitting in money market funds, look at the trillions of home equity, 401K accounts, and so on: we’re rich, so what’s the worry?
But this is artifice: the vast majority of this wealth (68%, $113 trillion) is in the hands of 13.5 million households, the top 10%. The bottom 50%--170 million people--own 2.5% of the wealth--$4 trillion, a wafer-thin 3.5% of the wealth held by the top 10%.
According to an article in the Wall Street Journal (April, 2025, WSJ.com, $1 Trillion of Wealth Was Created for the 19 Richest U.S. Households Last Year), 19 households own $2.6 trillion in net worth, the same as 110 million Americans.
The top 1% (3.4 million people) own 31% of all net worth ($52 trillion), more than the net worth of all those in the 50% to 90% segment (136 million people).
The top 10% collect the lion’s share of all income and account for 50% of all spending.
It’s been reported that 41.7 million American workers (31% of the workforce) earn under $12 an hour. A brookings.edu report (2020) found that the median hourly wage of 53 million American workers (ages 18-64, 44% of the workforce) is $10.22, and their full-time annual incomes are about $24,000.
Many of the lowest-paid workers have received a significant bump up in wages, but even a 10% to 20% increase barely moves the needle when we consider that the median full-time wage earnings in the US are $62,000.
I presented all this data in The Winners and Losers in 21st Century America. The real story of the US economy over the past 50 years is not The Fairy Tale narrative.
The real story is easily visible in the data: wages’ share of the economy have plummeted, reducing the standard of living of wage earners, and the official response has been to rely on financial gimmicks to keep expanding consumption/GDP with borrowed money.
Money supply has expanded faster than the economy, as has debt, as reducing interest rates encourages more borrowing which then inflates assets, generating “the wealth effect” when then boosts more borrowing and spending, a so-called virtuous cycle of expanding debt based on assets expanding in value, enabling even more debt.
But this reliance on asset bubbles to generate wealth and consumption has exacerbated wealth and income inequality, as the system is designed to benefit those who already own assets and who have access to low-cost credit, i.e. the already-wealthy.
The vast majority of unearned income flowing from capital (rental properties, stocks, bonds, business ownership) flow to the top of the wealth pyramid.
According to economist Branko Milanovic, who studies wealth and income inequality, the median annual per capita income from financial assets in the U.S. is $21.89. Yes, $22, enough for a few Happy Meals.
This chart tells the real story: a relative handful of households (the top 0.1%) collect the vast majority of unearned investment income, while the vast majority of households collect a few dollars.
Money supply has expanded faster than the economy, as has debt, as reducing interest rates encourages more borrowing which then inflates assets, generating “the wealth effect” when then boosts more borrowing and spending, a so-called virtuous cycle of expanding debt based on assets expanding in value, enabling even more debt.
But this reliance on asset bubbles to generate wealth and consumption has exacerbated wealth and income inequality, as the system is designed to benefit those who already own assets and who have access to low-cost credit, i.e. the already-wealthy.
The vast majority of unearned income flowing from capital (rental properties, stocks, bonds, business ownership) flow to the top of the wealth pyramid.
According to economist Branko Milanovic, who studies wealth and income inequality, the median annual per capita income from financial assets in the U.S. is $21.89. Yes, $22, enough for a few Happy Meals.
This chart tells the real story: a relative handful of households (the top 0.1%) collect the vast majority of unearned investment income, while the vast majority of households collect a few dollars.
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