Report from the Fed reveals that "economic growth" is a highly localized phenomena, masking widespread financial desperation

Trump likes to boast about economic growth, and while many have pointed out that many of the policies that produced the rosy figures are leftovers from Obama's policies, it's also important to note that the "growth" is highly localized, with aggregated national figures hiding the incredible economic desperation in the poorest parts of America.

The St Louis Fed has recently released a study of these effects: The Unequal Recovery: Measuring Financial Distress by ZIP Code, writted by Ryan Mather and Juan M Snchez. The study "creates a data set of household balance sheets at the ZIP code level and examines whether the change since the beginning of the economic recovery in 2010 has been as positive as it seems at the aggregate level." It's a robust methodology that has already been used in similar, earlier studies.

What it finds is that the super-low interest rates set in the Obama years mostly served to inflate asset prices, with a small spillover effect for affluent houses, who were able to refinance their mortgages (which mostly puts money in the pockets of the finance sector, but also benefits the most affluent of refinancers). This allowed the best-off American homeowners to save more, improving their asset-to-debt ratios, producing better financial numbers that were averaged out across the nation.

The economic segregation in American neighborhoods produced a situation where people in two adjacent neighborhoods saw very different outcomes during this period, with debt skyrocketing in one and declining in the other. The levels of debt -- and the increase in financial distress -- has climbed almost as fast as the wealth of the more fortunate, but the way that these figures are averaged together masked this, making America seem to be enjoying broad prosperity even as its poorest people were getting poorer. Read the rest