The world’s richest country appears to be shrinking, following a boom period in which Americans’ collective net wealth has risen at an impressive rate over the past two years, even as families and businesses grapple with the scourge of COVID-19.
American households accumulated an additional $38.5 trillion from early 2020 to the end of last year, taking their collective net wealth to a record $142 trillion, according to Federal Reserve estimates.
However, as the United States tries to live with the virus and restore spending back to pre-pandemic normal, it now faces a new threat: the decline in collective wealth since the beginning of 2022, which JP Morgan estimates to total at least $5 trillion, and might It will reach $9 trillion by the end of the year, according to Bloomberg.
So far, the brunt is borne by the richest Americans, as billionaire fortunes have fallen by nearly $800 billion since their peak, amid sharp losses in stocks, cryptocurrencies and other financial assets. High interest rates are also beginning to destabilize the housing market, with middle- and working-class families putting away the bulk of their wealth.
To eliminate the highest inflation in decades, the Fed needs to get Americans to rein in their spending, even if it takes an economic slowdown to get there.
Since the beginning of the year, the S&P 500 is down 18%, the Nasdaq 100 is down 27%, and the Bloomberg Crypto is down 48%.
All this amounts to a “wealth shock” that is set to derail growth next year, JPMorgan economists led by Michael Feroli wrote in a note on Friday.
It was billionaires The biggest winners of 2020 and 2021 are now losing more than just regarding anyone else, as the Bloomberg Billionaires Index, a daily measure of the wealth of the world’s 500 richest people, has fallen by $1.6 trillion since its peak in November.
Americans lead the index, and have lost $797 billion since the peak. Perhaps the biggest loser was the richest person in the world, Elon Musk. He has lost $139.1 billion, or 41% of his fortune, since November, when his net worth briefly exceeded $340 billion. Amazon founder Jeff Bezos – the second richest person in the world – lost $82.7 billion, or 39% of his peak wealth.
And while wealth losses among the richest Americans, who make up just 0.001%, reduce inequality, they are not an outlet for most of those concerned regarding widening inequality in the United States.
