US Household Wealth Sees Largest Increase in 30 Years... One-Third Goes to Top 1%

Annual Increase in US Household Assets
[Image source= Wall Street Journal]

[Asia Economy Reporter Park Byung-hee] It has been confirmed that U.S. household assets increased by the largest margin in 30 years last year.

According to the U.S. central bank, the Federal Reserve (Fed), household assets increased by $13.53 trillion (approximately 1,526.9 trillion KRW) last year, reported the Wall Street Journal (WSJ) on the 27th (local time). The increase last year was 13.8% higher than the $11.89 trillion increase in 2019, and more than double the average increase of $5.167 trillion from 2010 to 2019.

WSJ explained that considering the federal government’s unprecedented fiscal spending in response to the COVID-19 recession, this increase in household assets is not surprising. Almost all Americans reduced credit card debt, increased savings, and lowered mortgage interest rates.

Typically, household assets decrease during recessions. During the global financial crisis in 2008, U.S. household assets decreased by $8.07 trillion. However, during the COVID-19 recession, household assets increased significantly thanks to the government’s large-scale fiscal spending.

Thanks to government fiscal spending, the stock market enjoyed an unexpected boom. Of the more than $13 trillion increase in household assets, 44% was due to stock price increases. Since the wealthy tend to hold more stocks, wealth inequality has deepened.

One-third of the increased household assets went to the top 1% high-income earners. Expanding the range to the top 20% high-income earners, they accounted for more than 70% of the increased household assets. The top 20% took $9.84 trillion, and the second-highest 20% also increased their assets by $2.42 trillion, while the bottom 20% received only $50 billion.

Asset Growth by Income Bracket in the U.S.
[Image Source= The Wall Street Journal]

Housing prices also typically fall during recessions, but during this COVID-19 recession, they surged instead. The median price of existing homes surpassed $200,000 for the first time last year and exceeded $350,000 in May. With housing prices rising sharply, it has become even more difficult for low-income groups to own homes.

The housing supply shortage is worsening. Economists expect that while the rate of housing price increases will slow this year, the upward trend in housing prices will continue.

The reduction in low-income jobs is also a factor exacerbating wealth inequality. Office workers saved on commuting and meal expenses by working from home, but because they did not go to work, low-wage jobs such as restaurant staff and cleaners decreased.

According to Opportunity Insights at Harvard University, jobs paying more than $60,000 increased by 2% in April this year compared to January last year, while jobs paying less than $27,000 decreased by nearly 24%.

This content was produced with the assistance of AI translation services.