All Get Richer Except The Poor

A new survey shows that U.S. household assets are soaring

You might think that news of an even fatter budget surplus would have citizens--and politicians--crying out for a tax cut. But as word spread that the Congressional Budget Office raised its estimate to a cumulative $2 trillion by 2010, there was nary a peep. Why? Maybe Americans are too busy counting their money. A Federal Reserve survey released on Jan. 18 found that the median net worth of U.S. families had recently jumped nearly 18%--from $60,900 in 1995 to $71,600 in 1998, the survey's latest year. Net worth includes assets such as stocks and equity in a home minus liabilities like mortgages and other debt.

Behind the wealth surge: a rip-roaring stock market that brought benefits to a wide swath of Americans. The in-depth survey of 4,000 households found that 48.8% of families owned stock in 1998, either directly or indirectly through mutual funds or 401(k) pension plans. That was up sharply from 40.4% in 1995. Thanks to the steep rise in stock prices, the average value of those holdings also soared, from $15,400 in 1995 to $25,000 in 1998.

TRICKLING DOWN. While the richest have benefited most, the middle class has progressed, too. The median net worth among households with incomes of $25,000 to $49,999 rose by 6.5%, to $60,300. The value of stocks in this segment climbed $3,000, to $11,500. The median net worth of households earning from $50,000 to $99,999 climbed 20%, to $152,000, as their stock holdings increased 50%, to $35,700.

On the face of it, those families earning $100,000 and up did not fare quite as well. The median net worth for that group actually dipped slightly, to $510,800. But the average net worth rose 22%, to more than $1.7 million, indicating that the very wealthiest have done extaordinarily well.

The surging economy, however, has left the poor behind. Households making $10,000 to $25,000 a year suffered a 20% drop in their net worth as they took on more debt. But for the vast majority of families, the good times just keep getting better.

Before it's here, it's on the Bloomberg Terminal.