U.S. household net worth rose sharply in the first year of the pandemic, with the poorest half of the country posting the fastest increase in percentage terms -- even though their dollar gains were dwarfed by the new wealth flowing to the top.
The aggregate net worth of the bottom half of households grew 36 per cent in the 12 months through March, compared with a 33 per cent jump for the top 1 per cent, according to data published this week by the Federal Reserve.
That translates to US$700 billion of extra wealth for the 64 million households that make up the bottom half. Their share of the national total rose to the highest level since 2007 -- though it’s still only 2 per cent. By comparison, the top 1 per cent of households -- about 1.3 million families -- saw their net worth surge by more than US$10 trillion in the year through March.
Most of the new wealth at the top came from gains in the stock market. The richest 1 per cent of households held equities worth US$20 trillion last quarter, up from US$11.5 trillion a year earlier, and their share of overall stock ownership rose to a record high of 53.5 per cent.
A nationwide housing boom has been the other big driver of wealth. The top 10 per cent of households now hold real-estate assets worth a net US$11.8 trillion (after deducting mortgage debt), compared with US$1.4 trillion for the bottom 50 per cent.
Broken down by education, college graduates posted the biggest gains but other groups weren’t far behind in percentage terms -- except for households headed by people without a high-school degree, whose net worth declined in the period.
Squeezed middle
The Fed also breaks down wealth holdings by income groups -- where the data shows a surge at the top and a squeeze in the middle.
The highest 1 per cent of earners saw their share of overall wealth rise to a record high of 26.7 per cent. For the middle one-fifth of the income distribution, the share dropped to 7.2 per cent, a record low.
Those trends have persisted since the financial crisis of more than a decade ago. Compared with the second quarter of 2009, the highest earners have added almost 6 percentage points to their share of the national wealth, while the middle-class share has dropped more than 2 percentage points.
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