The Federal Reserve recently updated data breaking down wealth distributions in the U.S. A Bloomberg story noted the share of wealth held by the richest Americans is now at its highest level since World War II.
In each of the charts below, the blue area represents the wealthiest 0.1% of Americans, the orange represents the rest of the 1% (0.1% to 1%), the red represents the next 9% (1st to 10th percentile), the cyan shows the next 40% (10th to 50th percentile), and the green shows the lowest 50% by wealth.
The bottom 50% of households by net worth account for just 2.5% of the country’s wealth. Technically it is true that this group has seen its share of wealth grow since 2011, but a deeper dive into the assets and liabilities of these groups shows why lower-income households remain stressed.
The divide between the richest Americans and the bottom 50% looks even starker when comparing equity ownership. As the chart below shows, the top 1% (blue and orange) own just over 50% of all stocks in the U.S. The top 10% (blue, orange and red) own over 87% of all U.S. equities. The bottom 50% own 1% of equities outstanding.
When talking about the K-shaped economy, this is where the lower-income groups are hurt the most. They do not benefit from rising stock markets to the degree everyone else does.
Interestingly, the bottom 50% do not fare much better in terms of pension entitlements. Pensions are distributed almost entirely to the 1st through 50th percentiles (red and cyan).
The picture changes when looking at liabilities. The bottom 50% of Americans are responsible for 51.6% of consumer debt. The bottom 90% (cyan and green) account for 86.6% of all consumer debt, leaving the top 10% (red, orange, and blue) holding just 13.5% of consumer debt.
On one hand, wealth distributions have largely been static for decades. These changes are slow-moving. However, periods of fast stock appreciation certainly benefit the wealthiest 10% due to their large exposure to stocks. Those not as fortunate have to be more concerned with the fact that wages have failed to keep pace with inflation on a cumulative basis since the pandemic. This is the K-shaped economy in a nutshell.
The next chart shows the distribution of assets in the U.S. The wealthiest 1% (blue and orange) own 29% of all assets. The wealthiest 10% (blue, orange and red) own 64% of all assets. The bottom 50% (green) own just 5% of assets. By this metric, the bottom half of the country by wealth has seen their share of assets shrink since 2011.