September 18, 2014

The nation’s wealth recovers, but largely for those at the top

The nation’s aggregate wealth continued to show signs of recovery, ascending to $81.5 trillion as of June 30, after bottoming out at $55 trillion in 2009, according to a new Federal Reserve report  released Thursday.

Net Worth of Households and NonprofitsThe Fed’s aggregate wealth figures, which measure the total net worth of all U.S. households and nonprofits, suggest that inflation-adjusted wealth per household has significantly increased since 2009 (roughly growing 29%) and has surpassed its pre-Recession peak. (The chart to the right does not show these figures adjusted for inflation or number of households.)

But as other economic reports and indicators suggest, that wealth recovery has been concentrated on the wealthiest Americans. Although there is some evidence that those at the bottom are also seeing an economic lift, the aggregate net worth for America’s economic middle is actually declining. In August, the Census Bureau released detailed wealth tabulations that imply that the minimum wealth level needed to qualify for the wealthiest 1% of American households increased from $2.3 million in 2009 to $2.4 million in 2011.  That in itself indicates there were wealth gains at the very top of the wealth distribution.  On the other hand, the minimum wealth level needed to be in the wealthiest 4% of households fell from 2009 to 2011, from which one infers that wealth declined for households at the wealthiest 4% level.

The Census figures also indicate that there were small gains in wealth among the nation’s least wealthy households—the bottom 30% (in 2011 households with a net worth of $7,500 or less).  But for the broad middle up to the most wealthy 4% of American households, wealth declined from 2009 to 2011.

How Wealthy Do You Have to Be to Be Considered the 1%?Similarly, earlier this month the Federal Reserve reported that the minimum wealth needed to qualify for the wealthiest 5% of American households fell from 2010 to 2013.  The decline in the cutoff indicates that wealth gains occurred only among households wealthier than the most wealthy 5%.

The growth in the nation’s wealth from $55 trillion in 2009 to $81 trillion in 2014 tracks closely with the direction of change of other economic indicators since 2009.

For many American households most of their wealth is tied up in their homes.  Nationally, the Case-Shiller home price index is up 13% from March 2009. The S&P 500 stock market index recently closed above 2000, up from its low of 677 in March 2009.

So the deluge of wealth figures over the past month indicate that America’s household wealth pie is growing due to rising values for stocks and homes.  But, the first few years of the wealth recovery have been very uneven.

Topics: National Economy, Wealth, Socioeconomic Class

  1. Photo of Richard Fry

    is a senior researcher focusing on economics and education at Pew Research Center.


  1. Kevin Wilcoxon3 years ago

    The top always benefits, it seems, in all economic phases. How do they do that? It’s not from working a job. It’s accountants, lawyers, brokers, etc. who drive and benefit from these deals. They just make deals and make money. They contribute nothing to American society except greed. They are parasites.

    1. RoyTom3 years ago

      Capitalism has brought us all we enjoy, not socialism. Money makes money : any investor knows this, wealthy or not. Get an education and some sense.

  2. RL3 years ago

    All this time I thought the 1% threshold was at $5.8 million.. I guess I’ve been in the 1% for years without even knowing it. The funny thing is I find myself trying to save money all the time and I don’t feel that wealthy at all. I feel lucky for sure, but not “rich” like the label.

  3. DH3 years ago

    Some articles report that a much higher level of wealth is required to be in the top 1%, ranging from $8.4 million to over $11 million. See…. Can you reconcile these different estimates?

    1. Richard Fry3 years ago

      At the moment I can not reconcile the different estimates. This is an area of ongoing inquiry on my part.

      I will offer a few observations. You are curious about the level required to qualify for the wealthiest 1%. The post emphasizes the change in this level. To my knowledge there have not been other published estimates of the recent change in this level. The Federal Reserve bulletin cited in the fifth paragraph reports the change in the level required for the wealthiest 5%. Correct me if I am wrong, that report does not discuss the top 1%. Similarly, recent wealth developments based on The University of Michigan’s Panel Study of Income Dynamics reported changes in the cutoff for the wealthiest 5% (published in June 2014). So, hopefully the new Census Bureau estimates shed light on the recent change in wealth among the nation’s wealthiest households.

      Second, the detailed tabulations provided by the Census Bureau give an estimate of the wealth level of the wealthiest 1.35% of households. For the post wealth categories were rounded to their nearest whole percentile.

      There are a number of boutique consulting firms that develop estimates of high net worth households. To my knowledge their surveys and survey methods are not in the public domain and I am not familiar with their estimates.

      There are three major nationally representative surveys of household wealth: the Federal Reserve’s Survey of Consumer Finances, the U.S. Census Bureau’s Survey of Income and Program Participation (the source for the estimates in the post), and Michigan’s Panel Study. The Pew Research Center actively analyzes the first two surveys. They differ in their coverage of specific assets and liabilities. They also differ in their sampling design. The Pew Research Center has not exhaustively compared and contrasted the two surveys. Census Bureau Current Population Report P70-88 does provide a comparison.

      One motivation for publishing the post was to inform researchers and others interested in America’s wealth distribution that the Census Bureau is publishing information not only on median wealth but the upper echelons of the wealth distribution. If readers are now aware that the Census Bureau is illuminating the levels and trends in wealth among the nation’s wealthier households then the post serves a useful purpose.

  4. DH3 years ago

    Other studies show the cutoff levels of wealth to be in 1% to be much higher (such at $8.6 million to $11 million). See… Can you reconcile these differences?

    1. Muddy wealth3 years ago

      I was going to say the same thing & I thought it was pegged around $5mm, 2.4mm seems too low with 388k as the 2011 1% income cutoff

  5. RJ3 years ago

    Interesting stats, would like to know definition of hh wealth, is it investable assets, or does it include home?

    1. Richard Fry3 years ago

      Good Q, you are right, different researchers sometimes define it differently. For all 3 data sources mentioned in this post, hh wealth includes the value of financial assets plus the net value of physical assets, such as home equity and the value of autos owned. So it includes the net value of home (home value minus any outstanding mortgages secured by the home)

      1. RJ3 years ago

        ok, that helps, I like clear definitions, I know the world is moving away from footnotes:-).

  6. R. Pinkus3 years ago

    Just a few weeks ago, two separate news articles stated that income for wage-earning Americans was 6% less in 2014 than it was in 2000 and that the average work week for Americans is now 47 hours.

    Working longer for less, but if anyone in the media talks about it much they’re accused of inciting “class warfare”.

  7. Dan3 years ago

    Looking at the “Wealth Level Needed to be in…” chart, does that mean that 10% of households had less than -$6244 in 2011? Oy vey!

    1. Richard Fry3 years ago

      Yup, 10% had a negative net worth of $6,244, meaning what they owed their creditors was at least $6,244 more than the value of their assets.

  8. EVVJSK3 years ago

    Would be great if you could translate percentages into income levels (i.e. at what income level does the top 4% start at, etc…

    1. Richard Fry3 years ago

      Unfortunately, the Census tabulations do not reveal that. Keep in mind that the relation between wealth and income is not 1 to 1. While wealthier households do tend to be higher income households and vice versa, it is not too hard to come up with examples where they are not. For example, a young two professional family may have a very high household income but not much of a nest egg since they are just starting out. Similarly, some retired families might have significant wealth accumulated but only modest incomes because they may not have a lot of income producing wealth. So just because a household has high net worth does necessarily imply that they have a high income.

    2. S E3 years ago

      Here’s a link to a blog article that responds to EVVJSK’s comment:

      What Is Your U.S. Income Percentile Ranking?


      And Mr. Fry is right, net worth and income are apples and oranges.

  9. Noonan3 years ago

    Paper dollars are not wealth.

  10. Tom Mariner3 years ago

    Given the fact that the folks on top are doing better than the folks on the bottom, which group would you like you or your kids to be in?

    The current Administration seems to be trying for votes saying that the top earners cheated and stole from others and are to blame. Their message seems to be to punish those who earn, even if they actually invented something or managed something better.

    It comes down to a mother giving up and advising her kids that the deck is stacked against them and they might as well not try. Rather than finding out the path that gets their offspring into the big bucks.

    There is however, the tendency for the rich folks to want to give their kids an advantage, and unfortunately, that ain’t fair. And deprives the nation of their best and brightest we didn’t even know was there. But don’t take away from this the inevitability of class immobility from years past that creates despair and submission.

    1. RoyTom3 years ago

      I’d rather be at the top anytime. It’s a combination of educated parental inspiration, early in life investing (not saving), avoiding the naysayers and excuse makers, having a plan in life chartered as best one can, and associating with the winners – avoiding the losers. One has to be judgment orientated by the way; how else to separate from those who contribute nothing to society and themselves? Capitalism has brought us so much and not socialism, contrary to what one political party (guess) promulgates through lies, promises, and the “It Takes a Village” mentality.

  11. Stephen3 years ago

    When Free Trade Policy opened our USA Borders …

    You could hear the Sucking Sound of USA “Muscle” Jobs moving to Low Cost “Muscle” Countries.

    This left an entire population of Muscle Workers without Jobs.

    These displaced Muscle Workers were caught Flat Footed and were unable to respond with any ReTraining Adjustment .. translating to UnEmployment.

    Further, these Muscle Workers ( as a general comment ) raised Muscle Children to continue just as Dad & Mom had done generations before.

    These Muscle Children were also caught without Jobs … translating to Employment.

    Add to this …

    The Growth in the New World Economic Order is “ Digital” ..

    All the Growth we have seen is the result of a Digital Explosion …requiring “ Brain Muscle” not “Muscle Muscle”.

    In essence the Muscle Workers and their Muscle Children have been left High & Dry without ANY Jobs here in the USA.

    To Top thing Off ..
    the Digital Explosion has exposed a major Flaw / Vulnerability in our Children’s Education System. Namely, our Kids are not being taught Skills for the New Digital Age.

    Fast forward …

    The Old Muscle Workers remain chronically UnEmployed ..
    their Kids are chronically Unemployed ..
    and our Graduating Kids .. do not have the Skills necessary for the Digital World …

    This is not to say that Free Trade is Bad .. it only points to the ineptness of our Policy Makers to plan for a smooth transition to allow our Muscle Workers and their Kids to Educationally ReTool for the New Digital World ..

    As well as to provide time for our School System to get into “Digital Gear” …

    Take Home Message:

    The Strata of Muscle Workers ,their Children and the immediate Uneducated Digital Students will continue to be a NonProducing Strata in ur population until they move to the Medicare / Medicaid System. ?

    Meanwhile the Corporate Boys / Girls have shifted accordingly, they continue their Stock holder Profit Max Mission …and Life is Just $$ Fine.

    Thank You Policy People for your Thought & Lack of Foresight.

    Oh by the Way .. You still have your job .. Yes ?

    1. TAS3 years ago

      Stephan, right on. Looking back at the NAFTA days, the policy makers said the “muscle jobs” would go to other countries and the USA will get better, higher skill jobs. This is true, but they never provided a means for all the displaced workers to get those jobs. While seating in graduate school for my CS and EE degrees, I was the only white boy among all the international students, in ALL my classes. I truly have my doubts the US will ever recover from this situation, and I really can’t understand the desire to bring in more low skilled legal or illegals from other countries. This amounts to a lot of competition for those McDonald jobs. When I was considering Canada and New Zealand, their requirements are tough and they are only looking for those that can add to their country, not drain it.

      1. RoyTom3 years ago

        Precisely, and why we are on an irreversible downward slide, added to the overpopulation problem. Too many people, 7 Billion and counting to 15 by 2015 worldwide, will result in too many of the lower classes trying to claim their “due” in the entitlement society here especially that can’t even protect it’s borders and vote for politicians promising them anything at the expense of the individually responsible successful. Should hold promise for the Democrats.

  12. Chad Thompson3 years ago

    Most of us ask “Recovery? What Recovery?”. My house value and salary are down 40%. The lost decade is turning into a lost half-lifetime.

    I’ve rarely found aggregate measurements such as total wealth or GDP to be useful due to skew and increasing population. Instead, a measurement with actual value would be something like median hourly total compensation (adjusted for real inflation, not CPI-U).

    1. Richard Fry3 years ago

      Your experience is in line with the findings. Total wealth is up but for many households there has been minimal or no recovery of wealth. I agree that the aggregate measures need to be interpreted in light of increasing population and wealth across the distribution of households.

      While median hourly total compensation may have value, it only applies to workers. And we probably also want to know how many hours workers are working. So I think household wealth is a valuable indicator to examine.