VIRTUALLY all Americans have become wealthier since the pandemic. But as the overall pie has grown, the slice for a group of affluent households is shrinking.
Since the end of 2019, households in the 90-to-99.9 per cent bracket of wealth have lost their share of the US total mostly to those in the bottom half and the top 0.1 per cent, according to data from the US Federal Reserve. These families, who are well off but shy of the mega rich, typically earn around US$430,000 in annual income.
US households have added US$37 trillion in wealth in the past four years, but the distribution has become more concentrated among the very rich – the top 0.1 per cent.
Those roughly 133,000 split about US$20 trillion in wealth between them as of the end of 2023, equating to some US$150 million per household. That translates to a 47 per cent increase in that time.
The 0.1 per cent now account for 13.6 per cent of total household wealth, near a record for that group in Fed data back to 1989. The shares held by the bottom half and much of the middle class have also continued to grow, while the proportions for the 90-to-99 per cent and 99-to-99.9 per cent are each near their lowest since the early 2000s.
To be sure, the pandemic era has done little to improve growing inequalities in the country. The roughly 13 million households who make up the tier just below the top 0.1 per cent are still very much upper tier and hold slightly more than half of the nation’s wealth. By contrast, the 66 million households in the lower half only hold 2.5 per cent of the US total.
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The top 0.1 per cent holds close to half of their assets in corporate equities and mutual funds, with stock holdings adding more than US$3 trillion in the past four years. These households also have nearly a quarter of their wealth tied up in private businesses.
For the bottom half, however, real estate makes up the majority of their assets. Consumer durable goods, such as cars, are the next biggest holding, comprising about one-fifth of their assets.
Broken down by demographic factors, the biggest losers of wealth since the pandemic are households that are Black, middle-aged and those with less education.
Middle-aged Americans, who are between 40 and 69 years old, hold a smaller share of US wealth now compared to the end of 2019. Before the pandemic, those households held close to 70 per cent of US wealth, but that shrank to under 63 per cent by the end of 2023. At the same time, the share held by older Americans grew to a record 30.8 per cent.
Some of that reflects an ageing population – there are simply more older people, and it takes time to accumulate wealth. But other factors are also at play.
US equity markets near record highs helped older Americans – who have more assets invested – to gain a greater share of overall wealth. Further, many people over 70 own their homes, so robust housing price gains in several parts of the US have helped increase their wealth as well.
Continuing a long-term trend, a growing share of overall wealth is held by households with a college degree. That now makes up nearly three-quarters of the total, compared to around 70 per cent before the pandemic.
Only around 11 per cent of wealth is held by households without any college education. A generation ago, that share was closer to a third.
In the late 1980s, roughly 90 per cent of US wealth was held by white Americans – a proportion that has since fallen to around 84.5 per cent, but increased a bit since Covid. However, the share held by Black Americans shrank nearly a full percentage point in that time, while that held by Hispanics was little changed. BLOOMBERG
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