MacroMonitor Market Trends Newsletter February 2017
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Net Worth of the Top 1% of Households
Recent years have seen much discussion about how the rich are growing richer while everyone else is not. Data to back this assertion up sometimes define the rich by their income and other times by their investable assets. But income does not necessarily translate into wealth, because high living expenses can decimate a high income. And significant assets alone do not tell the whole story, because some people may have debts that leverage these assets. In order to define rich so as to avoid these problems, we decided to use net worth (total assets minus total liabilities) to determine who the wealthy are. Then we compared households in the top 1% with households in the bottom 50% by net worth to trend how the comparison has changed in the past two-plus decades.
In 2016, the 1.4 million households that constitute the top 1% in net worth control some $12.5 trillion. The entire bottom 50% of all households—some 67.8 million households—controls only $5.2 trillion. It is interesting to note that the peak for both these populations occurred in the summer of 2008—just before the Great Recession. At that time, the top 1% of all households—some 1.2 million—controlled the same amount: $12.5 trillion. The bottom 50% of all households—some 62.7 million—controlled slightly more than now: $6.5 trillion (adjusted for inflation to 2016 dollars).
What the above means is that the top 1% of households have completely recovered from the Great Recession, but the bottom 50% still have not returned to where they were in 2008. Put another way, 50 times more households are in the bottom 50% than the 1.4 million in the top 1%. But even altogether, the bottom 50% own half as much as the top 1%.
Going all the way back to 1994 and adjusting for inflation, the amount that the bottom 50% own is $2.7 trillion, and the top 1% own $6.2 trillion. Although each has roughly doubled between 1994 and 2016, the gap between them has more than doubled, from $3.5 trillion to $7.3 trillion.
For detailed findings about households in the Top 1% (as well as the Bottom 50% and the Middle 49%), the MacroMonitor provides the demographics; financial-product-and-service ownership and use; channel, institution, and intermediary use; trust; and selected financial attitudes of each of these households. Institutions interested in learning more about the Top 1% should contact us.
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