April 18, 2024

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USA: The 1% own a record wealth of $44.6 trillion. US Dollar – Economic Post

USA: The 1% own a record wealth of $44.6 trillion.  US Dollar – Economic Post

The wealth of the richest 1% in the United States rose to a record level of $44.6 trillion at the end of the fourth quarter, according to new data from the Federal Reserve, reported by CNBC.

In particular, the total net worth of the top 1 percent, defined by the Fed as those with more than $11 million, rose by $2 trillion in the fourth quarter. All profits came from their shares. The value of corporate stocks and mutual fund shares owned by the top 1% rose to $19.7 trillion from $17.65 trillion in the previous quarter.

While the value of their properties rose slightly, the value of their private businesses declined – essentially canceling out all other non-stock gains.

How many people are added to the rich list every day?

Explosion of wealth

The quarterly gain represents the latest addition to the unprecedented wealth boom that began in 2020.

As of 2020, the wealth of the richest 1% has increased by nearly $15 trillion, or 49%. Middle-class Americans also saw an increase in wealth, with 50% to 90% of Americans seeing their wealth increase by 50%.

Economists say a rising stock market gives an additional boost to consumer spending through what is known as the “wealth effect.”

When consumers and investors see their stocks rising, they feel more confident in spending and take more risk.

“The wealth effect from rising stock prices is a tailwind for consumer confidence, spending and broader economic growth,” said Mark Zandi, chief economist at Moody's Analytics. “Of course, this highlights the vulnerability of the economy if the stock market declines. This is not the most likely scenario, but it is one given that stocks look highly valued.

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shares

However, the latest report also highlights how US stocks are distributed. According to a Federal Reserve report, 10% of Americans own 87% of stocks and mutual funds. The top 1% own half of all individual stocks.

Economists say that the rise of the stock market brings great benefits to the wealthy, mainly boosting the market for high-end consumer goods. The wealth of middle-class and low-income Americans depends more on wages and home values ​​than on stocks.

“Those households in the top third of the income distribution, who own the most stocks, account for about two-thirds of consumer spending,” Zandi said.

With the S&P 500 up 10% year to date, the wealth of the upper class has likely already surpassed that number. While inequality fell slightly in 2021 and 2022 as wages rose and house prices rose, the wealth gap has since returned to pre-pandemic levels.

At the end of the fourth quarter, the 1% of the population acquired 30% of the country’s wealth, while the 10% captured 67% of the total wealth.