Economists say the rising stock market is giving an added boost to consumer spending through what is known as the "wealth effect."

Key Points

  • The wealth of the top 1% hit a record $44.6 trillion at the end of the fourth quarter.
  • All of the gains came from stock holdings thanks to an end-of-year rally.
  • Economists say the rising stock market is giving an added boost to consumer spending through what is known as the “wealth effect.”

The wealth of the top 1% hit a record $44.6 trillion at the end of the fourth quarter, as an end-of-year stock rally lifted their portfolios, according to new data from the Federal Reserve.

The total net worth of the top 1%, defined by the Fed as those with wealth over $11 million, increased by $2 trillion in the fourth quarter. All of the gains came from their stock holdings. The value of corporate equities and mutual fund shares held by the top 1% surged to $19.7 trillion from $17.65 trillion the previous quarter.

While their real estate values went up slightly, the value of their privately held businesses declined, essentially canceling out all other gains outside of stocks.

    • Flying Squid@lemmy.world
      11·
      7 months ago

      Imagine you have 200 million and you want to use 100m to build a hospital

      This basically never happens. You must know this. People that rich pretty much only care about making more money. The exceptions can be counted on one hand.

      And income is not the same as achievements. Elon Musk is not a model of a great achiever. There are people who have done far more to help the world than Elon Musk and are nowhere near as rich as him. Alexander Fleming’s work has likely saved billions of lives. Do you think he was getting paid anywhere near that high? Do you think he was worth what Elon Musk is worth? Spoiler: Not even close.

      I have no idea why you think wealth is always earned or deserved when it almost never is.