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In a recent report from the Federal Reserve, it was revealed that the wealth of the top 1% reached a record $44.6 trillion by the end of the fourth quarter. This surge was largely fueled by a year-end rally in the stock market, which lifted their portfolios significantly. The total net worth of the top 1% grew by $2 trillion in the fourth quarter, with all gains coming from their stock holdings.
This latest increase adds to the unprecedented wealth boom that began in 2020, driven by the Covid-19 market surge. Since then, the wealth of the top 1% has grown by nearly $15 trillion, a 49% increase. Middle-class Americans have also seen their wealth rise, with the middle 50% to 90% experiencing a 50% increase in wealth.
Economists attribute this growth to the “wealth effect,” where rising stock prices boost consumer spending and confidence. However, it’s important to note that stock ownership in the U.S. remains top-heavy, with the top 1% owning half of all individually held stocks.
Looking ahead, with the S&P 500 already up 10% this year, it’s likely that the wealth of the top earners has already surpassed the record set at the end of 2023. While inequality had slightly declined in the past years, the wealth gap has since returned to pre-pandemic levels, with the top 1% holding 30% of the nation’s wealth and the top 10% holding 67%.
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