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"The rich get richer", 1 percent of billionaires capture the record figure of 44 trillion dollars

2024-04-01 10:14:21Biznes SHKRUAR NGA REDAKSIA VOX

"The rich get richer", 1 percent of billionaires capture the record

The wealth of the richest 1% in the US hit a record $44.6 trillion at the end of the fourth quarter, as a year-end rally in stocks lifted their portfolios. This is according to new data from the Federal Reserve.

The total net worth of the top 1% of billionaires, defined by the Fed as those with wealth above $11 million, increased by $2 trillion in the fourth quarter. All profits came from their stock holdings. The value of corporate stocks and mutual fund shares held by the top 1% rose to $19.7 trillion from $17.65 trillion last quarter.

While their real estate values ​​rose slightly, the value of their private businesses fell, essentially canceling out all other non-stock gains.

The quarterly gain marked the latest addition to an unprecedented wealth boom that began in 2020 as the market surged due to the Covid-19 pandemic. As of 2020, the wealth of the top 1% has increased by nearly $15 trillion, or 49%. Middle-class Americans have also seen a rising tide of wealth, with 50% to 90% of Americans seeing their wealth increase by 50%.

Economists say the stock market boom is giving an extra boost to consumer spending through what's known as the "wealth effect." When consumers and investors see their stock holdings grow, they feel more confident spending and taking more risk.

However, the latest report also highlights how the heaviest share ownership remains in the US. According to the Fed report, the top 10% of Americans own 87% of individual stocks and mutual funds. The top 1% own half of all individually held stocks.

Economists say that the stock market boom brings huge benefits to the rich, mainly by increasing the high level of consumer markets and spending. The wealth of middle-class and lower-income Americans depends more on wages and home values ​​than on stocks.

Shares represent a growing part of the assets of 1%. Stocks accounted for 37.8% of total household assets, up 1% at the end of 2023, from a recent low of 36.5%.

However, because the wealthy do not need to spend as much of their earnings, a phenomenon known as the marginal propensity to consume and the increased wealth of the 1% may not have a substantial impact on the economy of consumption.

Consumer confidence among those earning more than $125,000 a year has been in "secular decline" since 2017, according to the Conference Board. With the S&P 500 already up 10% this year, it's likely that high-end wealth will have already reached a record high by the end of 2023. While inequality fell slightly in 2021 and 2022, as wages rose and housing prices rose, The wealth gap has since returned to pre-pandemic levels.


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