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Wednesday, November 21, 2012

Happy Thanksgiving to the 1% (That probably means you)

I'm re-posting this post from last year--I haven't changed a word.  It's easy to forget that there was extreme bearishness then too, but after Thanksgiving 2011 we got a 5 month rally from ~1150 to ~1400.  A similar rally this year would bring us to new all time highs.

Originally posted 11/23/11:

On a day that the Dow was down 236 points, it doesn't feel like there's much to be thankful for.  Between Europe's collapse, Washington's gridlock and China's slowdown, it seems the world is a dangerous place for investors.  Despite all the scary headlines, there is of course lots to be thankful for, even from an economic standpoint.  Most notably: we are a nation of 1%-ers.

The Occupy Wall Street movement has drawn plenty of attention to the income distribution within the United States, pitting the 99% against the 1%.  But what goes overlooked by these well meaning folks is that compared to the other 6.7B people on the planet, those occupying Wall Street probably don't come close to being in the 99%.

In the US it takes an income of $250,000 per year to be considered a 1%-er, but if you take the global population into the calculation, the number drops to just $47,500.  Considering that median household income in the US is $50,000 per year, this means that at the very least half of Americans live in a household that earns at the 1% level.  Even the US poverty line, which is set at a family of four earning less than $22,000 is not too far from being in the global top 10%.

Compared to inequity of global income distribution, the intra-US distribution is no great injustice at all.  That is something to truly be thankful for.

 


Global Income Distribution

Data is from the World Bank.

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