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Trends Newsletter December 2021

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The Rich versus the Poor

Volumes have been written about how well the wealthy have done over the course of the pandemic, but when we take into account all of their assets, the top decile has basically just been holding their own through 2020. Perhaps this is because the 14.6 million households that comprise the top 10% includes many who are not billionaires, and while the stock markets were positive during the first year of the pandemic (the S&P was up 16% in 2020), the economy and employment (especially service industries) were in considerable flux. During the past 25 years, the long-term trend for these top 10% of households shows their total assets nearly doubling, even when adjusted for inflation (from $2m to $3.7m).

Trend: Total Assets

The richest 10% of all US households own over half of all assets. Of the $97 trillion in total assets across all US households (includes homes, vehicles, and all financial assets), the Rich own $54 trillion whereas the poorest 10% of households own a mere $15 billion. And things aren't getting any better for the Poor. Only 1% of the Poor own securities outside of retirement accounts, compared with 80% of the Rich; and retirement accounts don't help because only 4% of Poor households have any retirement accounts, compared to virtually all (97%) of the Rich.

Discussing how much richer the Rich are than the Poor is not the story. The story is much worse than the gap, it's the trajectory. Over the course of the 25 years when the Rich managed to nearly double their wealth, the Poor have seen their wealth shrink from an average of $1,800 in 1994 to $1,100 in 2020. What's more, the volatility of the Poor's wealth is significantly greater, vacillating from a high of nearly $3,000 in 2000 (the peak of the dot-com boom) to as little as $500 in 2012 (a couple of years after the Great Recession). And the trend shows that the gap is getting larger. Clearly, the rising tide is not lifting all boats.

This month's Segment Summary goes beyond a simple call out about the (huge) financial differences between the Rich and the Poor. We also explore the ways in which the Rich and Poor have divergent demographics, and how their goals are dictated by necessity versus privilege. In a counter-intuitive vein, one of the most interesting parts of the analysis is the ways in which these two very different deciles are actually similar in their attitudes.