The Briefing
- Today, the prime 1% of U.S. households personal 31.2% of complete wealth
- Data going again over 200 years means that wealth inequality in each the U.S. and Europe reached its peak in the early 1900s
What The Data Says About Wealth Inequality
Wealth inequality has gone via peaks and troughs all through historical past.
Most not too long ago, in the decade between 2010 and 2020, the prime 1% of U.S. households’ portion of wealth has gone from 28.6% to 31.2%.
However, when expressed in uncooked {dollars}, issues start to look totally different. Wealth throughout the similar interval for the 1% went from roughly $17.5 trillion to $35 trillion. Meanwhile, the complete wealth pool rose from $60 trillion to $112 trillion.
In different phrases, all households by class have amassed wealth throughout the similar interval, albeit at totally different charges.
| Household Wealth Percentile | Annual Growth in Wealth (CAGR) |
|---|---|
| Top 1% | 6.54% |
| 90-99% | 5.75% |
| 50-90% | 4.97% |
| Bottom 50% | 3.30% |
Source: The Federal Reserve
Drivers Of Wealth Inequality
The longest bull market in historical past, which went from March 2009 to February 2020, has been a large driver for the latest divergence. The U.S. composition of wealth for the prime 1% of households skews in direction of company equities and mutual funds, of which they collectively personal $14 trillion. By distinction, the backside 50% of households personal $0.16 trillion.
It’s usually mentioned a inventory market correction is lengthy overdue. Since the prime 1% of households clearly have the most pores and skin in the recreation, if one have been to transpire, wealth inequality would probably retract.
A Longer Term Look
Although the inequality of wealth is closely mentioned in right now’s local weather, the numbers have been larger earlier than.
Wealth inequality, measured by the prime 1% of U.S. households’ portion of wealth, was at its peak at the begin of the twentieth century. Back then, a harsh and extra concrete class divide with decrease charges of upward mobility have been frequent themes.
At its peak in 1910, the prime 1% of U.S. households owned effectively over 40% of all wealth. Major world wars and the Great Depression appeared to be catalysts in opposition to this, and the years after WWII led to a few of the lowest ranges of inequality seen in the fashionable period.
Wealth inequality has ebbed and flowed all through historical past, however it has steadily crept again up in the previous couple of many years. Today, its opposed results proceed to garner the consideration of extra individuals—together with coverage makers who’re dealing with immense strain to discover a answer.
Where does this knowledge come from?
Source: The Fed
Notes: This knowledge covers Q2’2010-Q2’2020
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