The Top 0.1% Has More Than Doubled Its Wealth Since 2019

America’s wealth divide is increasingly becoming a story not just of the rich versus everyone else, but of the ultra rich separating from even other wealthy Americans, according to the Wall Street Journal.

Federal Reserve data show that the wealth of the top 0.1% has more than doubled since the end of 2019, with the divergence accelerating around the pandemic. Much of that increase has come from soaring financial markets.

WSJ writes that the roughly 137,000 households in the top 0.1% now control about $28 trillion, or roughly 15% of the country’s estimated $186 trillion in total wealth. That works out to more than $200 million per household on average.

Since 2019, this group has added approximately $14.5 trillion in wealth, with around $10 trillion coming from stocks and mutual funds (before this week).

The richest Americans own enormous amounts of financial assets, meaning a rising stock market disproportionately increases their net worth. In the 12 months through June 30, as the S&P 500 climbed 21%, the top 0.1% accumulated nearly $4 trillion in additional market wealth.

The divide is enormous even among wealthy Americans. The rest of the top 10% gained about $38.2 trillion since 2019, but those gains were spread across nearly 100 times as many households.

The contrast with the bottom half is even sharper. The bottom 50% collectively owns only about $4 trillion, or 2.3% of U.S. wealth, despite benefiting from higher home prices, pandemic assistance and lower debt.

Average household wealth in the bottom half is roughly $63,000. The average household in the top 0.1% therefore owns more than 3,000 times as much.

The ultra wealthy also tend to make their money differently. Federal Reserve data analyzed by economists Owen Zidar and Eric Zwick found that 37% of households in the top 0.1% receive most of their income from businesses and another 26% from capital gains. Just 10% rely primarily on wages and salaries.

In 2022, a household needed roughly $45.8 million to reach the top 0.1%. Because the group’s wealth has increased substantially since then, that threshold is likely considerably higher today.

Americans across the wealth spectrum have benefited to varying degrees from rising wages, home values, entrepreneurship and financial markets. But ownership of appreciating assets remains heavily concentrated at the top.

That means powerful stock market rallies can widen existing disparities almost automatically. Those who begin with the largest portfolios capture the largest dollar gains, widening not only the gap between wealthy and ordinary households, but also the distance separating America’s richest households from the merely rich.

So maybe the plunge in valuations of stocks last week is narrowing that disparity… which ironically is what so many claim to have voted for.