Since the early 1990s, as the soaring stock market added trillions of dollars to U.S. household wealth, the share of households with equity holdings--either directly or via mutual funds and retirement accounts--has risen from a third to close to half. So you might think that wealth in the U.S. would be growing less concentrated.
A recent study by Federal Reserve economist Arthur B. Kennickell, however, suggests that such a conclusion would be premature. Based on the Fed's consumer finance surveys, he estimates that the share of total household net worth held by the top 1% of households rose from 30.1% in 1992 to 34% in 1998. And the top half of that segment accounted for nearly 26% of all household wealth or an average $14.9 million per household--up from $11.3 million in 1995.
As Kennickell notes, though, the Fed's surveys don't count the super-rich--such as the 400 wealthiest Americans listed by Forbes magazine each year, whose net assets totaled $740 billion in 1998 (or nearly $2 billion per household). Adding the Forbes numbers to total household net worth in 1998 would increase the share owned by the top half of 1% of households to 27.7% (and the top 1% to 35.6%), and the average net worth of these half-million or so households to about $16.4 million.
Meanwhile, the share held by the bottom 90% of households has fallen from 33% in 1992 to 31.3% in 1998 (30.5% if one includes the Forbes numbers). Still, their average real net worth rose about 23% between 1995 and 1998 to $98,000, or $59,000 excluding home equity. Over the same period, the median net worth of all households in real terms rose just 17.6%, to $71,600, while the average real net worth of the top 1% increased by 28%.
The stock market did boost the net worth of the lower 90% of households in recent years, as the value of their shares surged by 126% between 1995 and 1998. But stock holdings of this group were still a relatively small part of the equity pie, and rose only modestly from 16.1% to 17.8% of the total. By contrast, the top 1% of households accounted for 42.8% of Americans' equity stakes, up from 41.9% in 1995.
As it happens, some 40% of the net worth of the bottom 90% of households is tied up in their homes. Not including principal residences, the Fed's latest numbers indicate that over 75% of total net worth was held by the top 10% of households in 1998, with the top 1% accounting for more than 40%.
While most American families enjoyed rising wealth in recent years, a significant number did not. Kennickell reports that people in the lowest 25% of the distribution either suffered declines in their nominal net worth or saw negligible change.