Warren Buffett and Jeff Bezos
Lacey O ‘Tool | CNBC; Getty Images
According to the Federal Reserve, the wealth of the richest Americans, such as Warren Buffett and Jeff Bezos, increased by a total of $ 6.5 trillion last year, driven mainly by share prices and rising financial markets.
At the end of the fourth quarter of 2021, total assets of 1% reached a record $ 45.9 trillion, according to the latest report of the Federal Reserve on Family Wealth. Their fortunes increased by more than 12 12 trillion, or more than a third, during the epidemic.
“The numbers are amazing,” said Edward Wolf, a professor of economics at New York University. “The epidemic wealth boom is certainly at or near the peak of all wealth growth over the last 40 years.”
The top 1% owned a record 32.3% of the country’s assets by the end of 2021, the data shows. Similarly, the share of wealth held by the bottom 90% of Americans has declined slightly since before the epidemic, from 30.5% to 30.2%.
Asset growth, which has been at an all-time high so far this year, is likely to stagnate or decline slightly due to stock declines.
The main drivers of the richest Americans last year were stocks and private businesses. According to Fed data, about 3 4.3 trillion of gross profit for last year’s 1% came from corporate equity and mutual fund shares. The stock portfolio of the top 1% is now valued at $ 23 trillion, and according to the central bank, they own a record 53.9% of the shares held individually.
Despite the demand for democratization of the stock market, with millions of new retail investors opening trading accounts on Robinhood and other platforms, stock ownership in America has actually become more concentrated than before the epidemic. Top 10% Record 89% of corporate equity and mutual fund shares held individually at the end of 2021.
A Gallup 2021 found that 56% of Americans own at least some stocks – slightly higher than the 55% average in 2019 and 2020, but still below the 62% high before the 2008 financial crisis.
Further resource inequality
Wolf, a professor at NYU, says rising stock prices have created a “reaction cycle” for wealth and inequality. As stock ownership tends to peak at wealth, more money is transferred to wealthy Americans as stock prices continue to rise. Since rich people can save and invest a large portion of their surplus wealth, most of the country’s wealth flows into the stock market. This further raises the share price.
“Increased wealth inequality drives the stock market, which in turn drives further wealth inequality,” Wolf said.
Private businesses have also been a powerful engine of resources for the top brass. According to the Federal Reserve, 57% of private companies own 1%. The value of private businesses owned by the rich increased 36% or $ 2.2 trillion last year.
“Small businesses are really important when you talk about the source of their resources,” Wolf says.
1% have moderately benefited from rising real-estate prices. Their real-estate holdings rose below $ 1 trillion during the epidemic to a maximum of $ 5.27 trillion.
But their share of the country’s real-estate actually fell slightly during the epidemic, as house prices and home ownership also rose in the rest of the country. Real estate is much more widely owned than stock, so rising home prices have helped the middle class a little more than the rich. The top 1% owned 14% of the country’s real estate at the end of 2021, down from 14.5% before the epidemic at the end of 2019.
The bottom 90% of Americans added $ 2.89 trillion to their assets last year from real estate.
“The housing boom has benefited the middle class,” Wolf said. “If it weren’t for that, wealth inequality would be even greater.”