All Get Richer Except The Poor
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.