A report on Great Recession

World map showing real GDP growth rates for 2009; countries in brown were in a recession.

A bank run at a branch of the Northern Rock bank in Brighton, England, on September 14, 2007, amid speculation of problems, prior to its 2008 nationalisation.

U.S. residential and non-residential investment fell relative to GDP during the crisis

U.S. households and financial businesses significantly increased borrowing (leverage) in the years leading up to the crisis

US household debt relative to disposable income and GDP.

U.S. Changes in Household Debt as a percentage of GDP for 1989–2016. Homeowners paying down debt for 2009–2012 was a headwind to the recovery. Economist Carmen Reinhart explained that this behavior tends to slow recoveries from financial crises relative to typical recessions.

Housing price appreciation in selected countries, 2002–2008

Securitization markets were impaired during the crisis.

Several major U.S. economic variables had recovered from the 2007–2009 Subprime mortgage crisis and Great Recession by the 2013–2014 time period.

U.S. Real GDP – Contributions to Percent Change by Component 2007–2009

Public Debt to GDP Ratio for Selected European Countries – 2008 to 2011. Source Data: Eurostat

Relationship between fiscal tightening (austerity) in Eurozone countries with their GDP growth rate, 2008–2012

Slovenian anarchist anti-fascist protest due to the great recession.

Sydney's financial district at night. Throughout the Great Recession, the Australian economy remained resilient and stable.

The anti-austerity movement in Spain, May 2011

Federal Reserve Holdings of Treasury and Mortgage-Backed Securities

Bank bailouts in the United Kingdom and in the United States in proportion to their GDPs.

Period of marked general decline, i.e. a recession, observed in national economies globally that occurred between 2007 and 2009.

- Great Recession

46 related topics with Alpha

President George W. Bush discusses Education, Entrepreneurship & Home Ownership at the Indiana Black Expo in 2005

Subprime mortgage crisis

9 links

Multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis.

Subprime mortgage lending jumped dramatically during the 2004–2006 period preceding the crisis (source: Financial Crisis Inquiry Commission Report, p. 70, Fig. 5.2)

Federal funds rate history and recessions

Domino effect as housing prices declined

Household debt relative to disposable income and GDP

Existing homes sales, inventory, and months supply, by quarter

Vicious cycles in the housing and financial markets

A mortgage brokerage in the US advertising subprime mortgages in July 2008

Historically less than 2% of homebuyers lost their homes to foreclosure. But by 2009 over 40% of subprime adjustable rate mortgages were past due. (source: Financial Crisis Inquiry Report, p.217, figure 11.2)

Growth in mortgage loan fraud based upon US Department of the Treasury Suspicious Activity Report Analysis

Number of U.S. residential properties subject to foreclosure actions by quarter (2007–2012)

Comparison of the growth of traditional banking and shadow banking

Borrowing under a securitization structure

Leverage ratios of investment banks increased significantly between 2003 and 2007.

MBS credit rating downgrades, by quarter

U.S. Subprime lending expanded dramatically 2004–2006.

Franklin Raines earned $90 million in salary and bonuses while he was head of Fannie Mae.

Federal funds rate and various mortgage rates

U.S. current account or trade deficit through 2012

The TED spread (the difference between the interest rates on interbank loans and on the safer short-term U.S. government debt) – an indicator of credit risk – increased dramatically during September 2008.

Impacts from the crisis on key wealth measures

Public debt to GDP ratio for selected European countries – 2008 to 2012. Source Data: Eurostat

This chart compares U.S. potential GDP under two CBO forecasts (one from 2007 and one from 2016) versus the actual real GDP. It is based on a similar diagram from economist Larry Summers from 2014.

U.S. savings and investment; savings less investment is the private sector financial surplus

Sectoral financial balances in US economy 1990–2017. By definition, the three balances must net to zero. Since 2009, the US foreign surplus (trade deficit) and private sector surplus have driven a government budget deficit.

Federal Reserve holdings of treasury (blue) and mortgage-backed securities (red)

Common equity to total assets ratios for major US banks

People queuing outside a Northern Rock bank branch in Birmingham, United Kingdom, on September 15, 2007, to withdraw their savings because of the subprime crisis.

U.S. federal government spending was held relatively level around $3.5 trillion from 2009-2014, which created a headwind to recovery, reducing real GDP growth by approximately 0.5% per quarter (annualized) on average between Q3 2010 and Q2 2014.

U.S. median family net worth peaked in 2007, declined due to the Great Recession until 2013, and only partially recovered by 2016.

Declines in residential investment preceded the Great Recession and were followed by reductions in household spending and then business investment.

The TED spread (in red), an indicator of perceived risk in the general economy, increased significantly during the financial crisis, reflecting an increase in perceived credit risk. The TED spread spiked up in July 2007, remained volatile for a year, then spiked even higher in September 2008, reaching a record 4.65% on October 10, 2008.

Financial crisis of 2007–2008

13 links

Severe worldwide economic crisis that occurred in the early 21st century.

World map showing real GDP growth rates for 2009 (countries in brown were in recession)

Share in GDP of U.S. financial sector since 1860

The New York City headquarters of Lehman Brothers

People queuing outside a Northern Rock branch in the United Kingdom to withdraw their savings during the financial crisis.

Federal Funds Rate compared to U.S. Treasury interest rates

A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2016 (not adjusted for inflation)

A protester on Wall Street in the wake of the AIG bonus payments controversy is interviewed by news media.

The crisis sparked the Great Recession which resulted in increases in unemployment and suicide and decreases in institutional trust and fertility, among other metrics.

Dorothea Lange's Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, age 32, a mother of seven children, in Nipomo, California, March 1936.

Great Depression

5 links

Severe worldwide economic depression between 1929 and 1939 that began after a major fall in stock prices in the United States.

The unemployment rate in the U.S. during 1910–60, with the years of the Great Depression (1929–39) highlighted

The Dow Jones Industrial Average, 1928–1930

Money supply decreased considerably between Black Tuesday and the Bank Holiday in March 1933 when there were massive bank runs across the United States.

Crowd gathering at the intersection of Wall Street and Broad Street after the 1929 crash

The Great Depression in the U.S. from a monetary view. Real gross domestic product in 1996-Dollar (blue), price index (red), money supply M2 (green) and number of banks (grey). All data adjusted to 1929 = 100%.

Crowd at New York's American Union Bank during a bank run early in the Great Depression

Crowds outside the Bank of United States in New York after its failure in 1931

Power farming displaces tenants from the land in the western dry cotton area. Childress County, Texas, 1938

The Depression in international perspective

The overall course of the Depression in the United States, as reflected in per-capita GDP (average income per person) shown in constant year 2000 dollars, plus some of the key events of the period. Dotted red line = long-term trend 1920–1970.

A female factory worker in 1942, Fort Worth, Texas. Women entered the workforce as men were drafted into the armed forces.

An impoverished American family living in a shanty, 1936

Unemployed men march in Toronto, Ontario, Canada.

Benito Mussolini giving a speech at the Fiat Lingotto factory in Turin, 1932

Unemployed people in front of a workhouse in London, 1930

Unemployed men standing in line outside a depression soup kitchen in Chicago 1931.

Burning shacks on the Anacostia flats, Washington, D.C. put up by the Bonus Army (World War I veterans) after the marchers with their wives and children were driven out by the regular Army by order of President Hoover, 1932

Buried machinery in a barn lot; South Dakota, May 1936. The Dust Bowl on the Great Plains coincided with the Great Depression.

CCC workers constructing drainage culvert, 1933. Over 3 million unemployed young men were taken out of the cities and placed into 2,600+ work camps managed by the CCC.

The WPA employed 2–3 million at unskilled labor.

Black Friday, May 9, 1873, Vienna Stock Exchange. The Panic of 1873 and Long Depression followed.

By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession.

Recession

8 links

Business cycle contraction when there is a general decline in economic activity.

Thus, if the 2008 recession had followed the average, the downturn in the stock market would have bottomed around November 2008.

Paul Krugman

6 links

American economist and public intellectual, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for The New York Times.

Paul Krugman, Roger Tsien, Martin Chalfie, Osamu Shimomura, Makoto Kobayashi and Toshihide Masukawa, Nobel Prize Laureates 2008, at a press conference at the Swedish Academy of Science in Stockholm.

Krugman giving a lecture at the German National Library in Frankfurt in 2008.

Graph illustrating Krugman's 'core-periphery' model. The horizontal axis represents costs of trade, while the vertical axis represents the share of either region in manufacturing. Solid lines denote stable equilibria, dashed lines denote unstable equilibria.

President George W. Bush poses for a photo with Nobel Prize winners Monday, Nov. 24, 2008, in the Oval Office. Joining President Bush from left are, Dr. Paul Krugman, Economics Prize Laureate; Dr. Martin Chalfie, Chemistry Prize Laureate; and Dr. Roger Tsien, Chemistry Prize Laureate.

Krugman at the 2010 Brooklyn Book Festival.

Krugman has since drawn parallels between Japan's 'lost decade' and the late 2000s recession, arguing that expansionary fiscal policy is necessary as the major industrialized economies are mired in a liquidity trap.

Shadow banking system

3 links

Term for the collection of non-bank financial intermediaries that provide services similar to traditional commercial banks but outside normal banking regulations.

Shadow banking has grown in importance to rival traditional depository banking, and was a factor in the subprime mortgage crisis of 2007–2008 and the global recession that followed.

New York City, the financial center of the United States

Economy of the United States

4 links

Highly developed country with a free market economy and has the world's largest nominal GDP and net wealth.

Washburn and Moen Manufacturing Company in Worcester, Massachusetts, 1876

Oil wells at Los Angeles, California, 1905

Consolidated B-24 Liberators at the Consolidated-Vultee Plant, Fort Worth, Texas, 1943

McDonald's restaurant in Mount Pleasant, Iowa

President Donald Trump with key automobile industry leaders, 2017

United States real quarterly GDP (annualized)

U.S. cumulative real (inflation-adjusted) GDP growth by US president (from Reagan to Obama).

Number of Businesses by Type (US Census Bureau 2019)

Job growth by US president, measured as cumulative percentage change from month after inauguration to end of term.

Panel chart illustrates nine key economic variables measured annually in 2014–2017. The years 2014–2016 were during President Obama's second term, while 2017 was during President Trump's term. Refer to citations on detail page.

US Census Bureau (Number of Employees per Business)

U.S. real median household income (1984–2018)

U.S. share of income (pre-tax and after-tax) earned by top 1% households in 1979, 2007, and 2015 (CBO data). The first date (1979) reflects the more egalitarian pre-1980 period, 2007 was the peak inequality of the post-1980 period, and the 2015 number reflects the Obama tax increases on the top 1% along with residual effects of the Great Recession.

U.S. family pre-tax income and net worth distribution for 2013 and 2016, from the Federal Reserve Survey of Consumer Finances.

Number in Poverty and Poverty Rate: 1959 to 2016. United States.

Wealth inequality in the United States increased from 1989 to 2013.

U.S. health insurance coverage by source in 2016. CBO estimated ACA/Obamacare was responsible for 23 million persons covered via exchanges and Medicaid expansion.

Chart showing life expectancy at birth and health care spending per capita for OECD countries as of 2013. The U.S. is an outlier, with much higher spending but below average life expectancy.

Bar chart comparing healthcare costs as percentage of GDP across OECD countries

U.S. uninsured number (millions) and rate (%), including historical data through 2016 and two CBO forecasts (2016/Obama policy and 2018/Trump policy) through 2026. Two key reasons for more uninsured under President Trump include: 1) Eliminating the individual mandate to have health insurance; and 2) Stopping cost sharing reduction payments.

Survival rate of U.S. start-ups, 1977–2012. Source: U.S. Census Bureau, Business Dynamic Statistics, Published by Gallup, reproduced in UNESCO Science Report: towards 2030, Figure 5.7, p. 143

The Interstate Highway System extends 46876 mi.

The Port of Houston, one of the largest ports in the United States.

Countries by natural gas proven reserves (2014). The U.S. holds the world's fourth largest natural gas reserves.

Protectionist measures since 2008 by country.

The Federal Reserve is the central banking system of the United States

Number of countries having a banking crisis in each year since 1800. This is based on This Time is Different: Eight Centuries of Financial Folly which covers only seventy countries. The general upward trend might be attributed to many factors. One of these is a gradual increase in the percent of people who receive money for their labor. The dramatic feature of this graph is the virtual absence of banking crises during the period of the Bretton Woods agreement, 1945 to 1971. This analysis is similar to Figure 10.1 in Reinhart and Rogoff (2009). For more details see the help file for "bankingCrises" in the Ecdat package available from the Comprehensive R Archive Network (CRAN).

CBO: U.S. Federal spending and revenue components for fiscal year 2020. Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources.

Congressional Budget Office (CBO) baseline scenario comparisons: June 2017 (essentially the deficit trajectory that President Trump inherited from President Obama), April 2018 (which reflects Trump's tax cuts and spending bills), and April 2018 alternate scenario (which assumes extension of the Trump tax cuts, among other current policy extensions).

Boeing CEO Dennis Muilenburg at the 787-10 Dreamliner rollout ceremony

Restaurants and shops in Chinatown, Philadelphia

Percent of U.S. economy from State-owned Enterprises or GSEs

Tennessee in 1897. The U.S. was a leader in the adoption of electric lighting

Steve Jobs and Bill Gates are two of the best-known American entrepreneurs.

Quarterly U.S. venture capital investments, 1995–2017

Gross domestic expenditure on R&D in the U.S. as a percentage of GDP, 2002–2013. Other countries are given for comparison. Source: UNESCO Science Report: towards 2030

World shares of GDP, research spending, researchers and scientific publications, 2009 and 2013. Source: UNESCO Science Report: towards 2030, Figure 1.7

US research and development budget by government agency, 1994–2014. Source: UNESCO Science Report: towards 2030, Figure 5.4, based on data from American Association for the Advancement of Science

Science and engineering in the U.S. by state. Source: UNESCO Science Report: towards 2030, Figure 5.6, based on data from American Association for the Advancement of Science

High-tech exports from the U.S. as a percentage of the world share, 2008–2013. Source: UNESCO Science Report: towards 2030, Figure 5.10, based on Comtrade database

A typical Walmart discount department store (location: Laredo, Texas).

The New York Stock Exchange is the largest stock exchange in the world.

United States historical inflation rate, 1666–2019.

Contributions to Percent Change in Real GDP (1930–1946), source Bureau of Economic Analysis

Contributions to Percent Change in Real GDP (1947–1973), source Bureau of Economic Analysis

Contributions to Percent Change in Real GDP (1974–1990), source Bureau of Economic Analysis

Contributions to Percent Change in Real GDP (1991–2008), source Bureau of Economic Analysis

Real GDP per capita in the United States

Historical growth of the U.S. economy from 1961–2015

US Gross Private Domestic Investment and Corporate Profits After Tax as shares of Gross Domestic Product

The Percentage of the U.S. working age population employed, 1995–2012.

Official U.S. unemployment rate, 1950–2005

United States mean duration of unemployment 1948–2010.

All employees, private industries, by branches

U.S. manufacturing industry's share of nominal GDP

U.S. Change in real income versus selected goods and services v1

Mean Quintile Household Income (1967-2015)<ref>{{cite web |url=https://fas.org/sgp/crs/misc/R44705.pdf |title=The U.S. Income Distribution: Trends and Issues |website= |archive-url= |archive-date= |access-date=5 March 2022}}</ref>

U.S. real median household income, 1967-2014<ref name="hbs.edu">{{cite web |url=http://www.hbs.edu/competitiveness/Documents/problems-unsolved-and-a-nation-divided.pdf |title=Problems Unsolved and A Nation Divided |website= |archive-url= |archive-date= |access-date=5 March 2022}}</ref>

Real family income indexed to 1973, across the distribution 1947-2014<ref name="hbs.edu" />

Real compensation per hour in the U.S. (1947–2021).

Historical graph of real wages in the U.S. from 1964 to 2005.

Median Real Wages by Educational Attainment.png<ref>{{cite web |url=https://fas.org/sgp/crs/misc/R45090.pdf |title=Real Wage Trends, 1979 to 2019 |website= |archive-url= |archive-date= |access-date=5 March 2022}}</ref>

Productivity and real median family income growth, 1947–2009.

Gini Coefficient for Household Income (1967–2007), source United States Chamber of Commerce

U.S. Income Shares of Top 1% and 0.1% 1913–2013

Life expectancy vs healthcare spending of rich OECD countries.<ref name=life>Link between health spending and life expectancy: US is an outlier. May 26, 2017. By Max Roser at Our World in Data. Click the sources tab under the chart for info on the countries, healthcare expenditures, and data sources. See the later version of the chart here.</ref><ref name=Kenworthy2011>{{cite web|last= Kenworthy|first= Lane|date= July 10, 2011|title= America's inefficient health-care system: another look|publisher= Consider the Evidence (blog)|url= http://lanekenworthy.net/2011/07/10/americas-inefficient-health-care-system-another-look/ |access-date=September 11, 2012}}</ref>

International Comparison{{nbs}}Healthcare spending as % GDP

Average tariff rates for selected countries (1913–2007)

Average tariff rates on manufactured products

U.S. trade balance and trade policy (1895–2015)

$U.S. federal effective tax rates by income percentile and component as projected for 2014 by the Tax Policy Center.<ref>{{cite web|title=Effective tax rates: income, payroll, corporate and estate taxes combined|url=http://pgpf.org/Chart-Archive/0102_tax-rates|publisher=Peter G. Peterson Foundation|access-date=November 3, 2013|date=July 1, 2013}}</ref><ref>{{cite web|title=T13-0174 – Average Effective Federal Tax Rates by Filing Status; by Expanded Cash Income Percentile, 2014|url=http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3933|publisher=Tax Policy Center|access-date=November 3, 2013|date=July 25, 2013|archive-url=https://web.archive.org/web/20141211105316/http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3933|archive-date=December 11, 2014|url-status=dead|df=mdy-all}}</ref>$

CBO estimates of historical effective federal tax rates broken down by income level.<ref name = "CBO 2010">{{cite web|url=http://cbo.gov/publication/44604|title=The Distribution of Household Income and Federal Taxes, 2010|publisher=The US Congressional Budget Office (CBO)|date=December 4, 2013|access-date=August 13, 2014}}</ref>

Federal, state, and local government spending as a % of GDP history

A pie chart showing global military expenditures by country for 2019, in US${{nbs}}billions, according to SIPRI.

$Assets of the United States as a fraction of GDP 1960–2008$

$Liabilities of the United States as a fraction of GDP 1960–2009$

Development of U.S. federal government debt ceiling from 1990 to January 2012.<ref>{{cite web|url=https://obamawhitehouse.archives.gov/omb/budget/historicals|title=Table 7.3 – Statutory Limits on Federal Debt: 1940–Current|publisher= Office of Management and Budget|access-date=December 25, 2013}}</ref>

U.S. public net debt and the total public debt

The U.S. economy experienced a serious economic downturn during the Great Recession, defined as lasting from December 2007 to June 2009.

Unemployment

4 links

People above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the reference period.

US unemployment rate, 1990—2022. The increase in unemployment during recessions (shaded) is called cyclical unemployment.

Short-Run Phillips Curve before and after Expansionary Policy, with Long-Run Phillips Curve (NAIRU). Note, however, that the unemployment rate is an inaccurate predictor of inflation in the long term.

Okun's Law interprets unemployment as a function of the rate of growth in GDP.

The Beveridge curve of 2004 job vacancy and unemployment rate (from the US Bureau of Labor Statistics)

Karl Marx, Theorien über den Mehrwert, 1956

Unemployment in Europe (2020) according to Worldbank

Unemployment rates from 2000–2019 for United States and Japan and European Union

Unemployment rate in the US by county in 2008

U1–U6 since 1950, as reported by the Bureau of Labor Statistics

A government unemployment office with job listings, West Berlin, West Germany, 1982

Migrant Mother, photograph by Dorothea Lange, 1936

Demonstration against unemployment in Kerala, South India, India on 27 January 2004

Unemployment rate in Germany in 2003 by states

In the Shapiro–Stiglitz model of efficiency wages, workers are paid at a level that dissuades shirking. That prevents wages from dropping to market clearing levels.

Supply-side economics proposes that lower taxes lead to employment growth. Historical state data from the United States shows a heterogeneous result.

Tax decreases on high income earners (top 10%) are not correlated with employment growth, but tax decreases on lower-income earners (bottom 90%) are correlated with employment growth.

Unemployed men outside a soup kitchen in Depression-era Chicago, Illinois, United States, 1931

The Depression of 1873–79: New York City police violently attacking unemployed workers in Tompkins Square Park, Manhattan, New York City 1874

WPA poster promoting the benefits of employment

Unemployment rate of Japan. Red line is G7 average. 15-24 age (thin line) is Youth unemployment.

US labor force participation rate from 1948 to 2021, by gender.
Male participation
Total labor force participation
Female participation

A historic shift began around the end of the Great Recession as women began leaving the labor force in the United States and other developed countries.

G20 members (dark blue), countries represented through the European Union (light blue) and previously invited states (pink) as of 2016.

G20

3 links

Intergovernmental forum comprising 19 countries and the European Union .

{{flagicon|United Kingdom}} United Kingdom

{{flagicon|United States}} United States

On 11 October 2008 after a meeting of G7 finance ministers, US President George W. Bush stated that the next meeting of the G20 would be important in finding solutions to the burgeoning economic crisis of 2008.

Income before (green) and after (pink) taxes and Transfer payments for different income groups starting with the lowest quintile.

Income inequality in the United States

3 links

Extent to which income is distributed in differing amounts among the American population.

Four charts that describe trends in income inequality in the United States. Top left: the share of pre-tax income earned by the top 1% (orange) versus the bottom 50% (blue). Top right: the share of after-tax income earned by the top 1% (orange) versus the bottom 50% (blue). Bottom left: the share of income earned by the top 5% (green), next 45% (blue), and the bottom 50% (yellow). Bottom right: the mean income of the top 5% (green), next 45% (blue), and bottom 50% (yellow) income groups.

Share of U.S. pre-tax income earned by the top 1% (blue) and top 0.1% (red) of households 1913–2016.

This CBO chart shows the cumulative increase in real household income by income quintile from 1979 to 2016, for income before taxes & transfers and after-tax income. It shows that even lower income quintiles still had sizable gains in income, although not as great as the top quintile.

CBO data indicates that real (inflation-adjusted) household income increased significantly after-taxes and transfers from 1979 to 2016 across all income quintiles. However, the top 1% income fell from 2007 to 2016, due to both the Great Recession and tax hikes on upper incomes during the Obama Administration.

Share of U.S. income earned by top 1% households in 1979 (blue), 2007 (orange), and 2016 (green) (CBO data). The first date 1979 reflects the more egalitarian pre-1980 period, 2007 was the peak inequality of the post-1980 period, and the 2016 number reflects the Obama tax increases on the top 1% along with residual effects of the Great Recession.

Illustrates the productivity gap (i.e., the annual growth rate in productivity minus annual growth rate in compensation) by industry from 1985 to 2015. Each dot is an industry; dots above the line have a productivity gap (i.e., productivity growth has exceeded compensation growth), those below the line do not.

Real GDP per household has typically increased since the year 2000, while real median income per household was below 1999 levels until 2016, indicating a trend of greater income inequality (i.e., the average is more influenced by high income outliers than the median). The income considered in the two lines is different as well; the GDP figure includes all income (derived from labor and capital) while the median income figure includes only a subset of income (wages/salaries but not benefits).

Labor's share of GDP declined by 4.5 percentage points from 1970 to 2016, measured based on total compensation. The decline measured for wages and salaries was 7.9 points. These trends imply income due to capital (i.e., asset ownership, such as rent, dividends, and business profits) is increasing as a % of GDP.

While middle-class family incomes have stagnated as income shifts to the top, the costs of important goods and services continue rising, resulting in a "Middle class squeeze."

A 2011 study by Ostry and Berg of the factors affecting the duration of economic growth in developed and developing countries, found that income equality has a more beneficial impact on steady growth than trade openness, sound political institutions, or foreign investment.

The Great Gatsby curve showing intergenerational economic immobility on vertical axis and increasing inequality on the horizontal axis for a number of different countries.

Political cartoon from the Progressive Era, when wealth concentration was similar to that of the present, shows how the concentration of wealth in a few hands leads to the extinguishing of individualism, initiative, ambition, untainted success, and independence.

Bartels studied the voting patterns of the US Senate and correlated it with the responsiveness to the opinions of different amounts of Income in the United States.

This Gini Index map shows regional and county level variation in pre-tax income inequality Gini index. The 2010 Gini index value range from 20.7 for Loving County (Texas) to 64.5 to East Carroll Parish (Louisiana).

Income gini coefficient map according to the World Bank (2018). Higher Income Gini Index for a nation in this map implies more income inequality among its people.

The distributional impact of the Affordable Care Act (ACA or Obamacare) during 2014. The ACA raised taxes mainly on the top 1% to fund approximately $600 in benefits on average for the bottom 40% of families.

Average statutory tax rates for highest-income U.S. taxpayers, 1945–2009.

Based on CBO Estimates, under 2013 tax law the top 1% will be paying a higher effective tax rate, while other income groups will remain essentially unchanged.

CBO chart illustrating the percent reduction in income inequality due to Federal taxes and income transfers from 1979 to 2011.

CBO charts describing amount and distribution of top 10 tax expenditures (i.e., exemptions, deductions, and preferential rates)

U.S. median family income from 2001 to 2016 (real, measured in 2016 dollars), with comparative statistics, from the Fed Survey of Consumer Finances. The top decile and bottom quintile had real increases in income comparing 2001 and 2016, while the 20th to 80th percentiles has decreases. For all families, the median was $54,100 in 2001 and $52,700 in 2016, a slight decline. Note this differs from real median household income, which hit a record level in 2016.

CBO Chart, U.S. Holdings of Family Wealth 1989 to 2013. The top 10% of families held 76% of the wealth in 2013, while the bottom 50% of families held 1%. Inequality increased from 1989 to 2013.

Illustration from a 1916 advertisement for a vocational school in the back of a US magazine. Education has been seen as a key to higher income, and this advertisement appealed to Americans' belief in the possibility of self-betterment, as well as threatening the consequences of not achieving economic security in the great income inequality existing during the Industrial Revolution.

It fell to 11.3% in 2009 due in part to the impact on investment income from the Great Recession, then increased thereafter, to 14.9% by 2012 as the economy recovered.