The Fed’s latest snapshot of U.S. household wealth on March 11 shows that the rich got richer during the pandemic, contributing to a record combined household wealth of $130.2 trillion in the fourth quarter of 2020.
While low-interest rates and massive government stimulus spending helped mute the financial fallout, the covid-19 pandemic hit the economy hard, but unequally.
Tens of millions of people lost their jobs or lost income, but many others were able to save money, partly because they couldn’t travel or go out to restaurants and shows.
Personal checking and savings accounts and money-market funds rose by $2.67 trillion to $16.5 trillion in 2020, even though yields were close to zero, Marketwatch reported. Consumers paid off a record $118.3 billion in credit card debt, Reuters reported.
The top 1 percent of U.S. households owned more than 30 percent of the wealth, according to a Federal Reserve Flow of Funds report graph showing wealth distribution in the third quarter of 2020. By comparison, the bottom 50 percent owned 2.02 percent of household wealth. The largest chunk of wealth — more than 38 percent — was owned by the 90-to-99-percentile of richest households in the U.S. The top 50-to-90-percent of households owned 28.7 percent of the wealth.
The widening wealth gap in the U.S. during the pandemic disproportionately impacted low-wage service workers and Black people. Meanwhile, billionaire wealth skyrocketed at an unprecedented rate, Forbes reported.
Tesla co-founder Elon Musk’s wealth increase by 242 percent over the first eight months of 2020. Amazon co-founder Jeff Bezos’s net worth grew by $65 billion.
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Access and exposure to the stock market were critical factors in the explosion of wealth among a particular segment of the U.S. population, according to Forbes.
The wealthiest 10 percent in the U.S. hold more than 88 percent of all available equity in corporations and mutual fund shares, according to a Federal Reserve estimate. The top 1 percent control more than twice as much equity as the bottom 50 percent of all Americans combined.
Rising real estate values added around $900 billion to household assets in the fourth quarter and rising equity markets added $4.9 trillion, the report showed.
