Wealthy Americans took a hit when the global financial crisis sent the economy into a nosedive, yet new research shows they alone — specifically, the richest 7% — benefited as households rebuilt their wealth in the first two years of the recovery.
From 2009 to 2011, the average wealth of America’s richest 7% — the 8 million households with a net worth north of about $800,000 — rose nearly 30% to $3.2 million from $2.5 million, according to a Pew Research Center report that analyzed recent Census data. By contrast, the average wealth of America’s remaining 93%, some 111 million households, actually dropped by 4% to $134,000 from $140,000. Wealth is the value of what a household owns minus what it owes.
“Wealth inequality increased during the first two years of the recovery,” the authors said. “On an individual household basis, the mean wealth of households in [the] more affluent group was almost 24 times that of those in the less affluent group in 2011. At the start of the recovery in 2009, that ratio had been less than 18-to-1.” Authors Richard Fry and Paul Taylor said they focused on the upper 7% of households rather than another share of high-wealth households due to limitations in the Census data.
The findings show that America’s economic recovery has been not just sluggish, but painfully uneven in its benefits. Rallying stock and bond markets have boosted the wealth of America’s most affluent, who tend to have much more of their wealth in the markets than in their homes. The Standard & Poor’s stock-market index rose 34% during the period covered by the study, while home prices declined, hurting less affluent Americans who have more of their wealth tied up in their home.