By most objective measures, stocks are soaring of late, with the market on Thursday notching its best first quarter in five years. Who should be particularly stoked: America's richest 1%, a demographic that CNBC reports was able to claim a combined net worth of $44 trillion in Q4 of 2023, per stats from the Federal Reserve. The fourth quarter alone saw a $2 trillion jump, per Business Insider, which attributes the record overall figure to an end-of-year "monster" stock rally. All gains that this group enjoyed were from their stock holdings, as the rise in their real estate values and decline in value of their private businesses basically nullified each other.
For the purposes of this report, the Fed considers the top 1% to be anyone with a kitty of $11 million or more. CNBC notes this achievement is just the "latest addition to an unprecedented wealth boom" that kicked off with the COVID pandemic, with the overall wealth of the top 1% spiking by $15 trillion, or nearly 50%, since 2020. Middle-class Americans have seen that same approximate percentage jump. And that, economists say, is leading to the "wealth effect," which is when consumers and investors feel flush thanks to their stock portfolios, and so start spending more and getting riskier in their investments.
The report also shows how "top-heavy" stock ownership remains in the United States, with the Fed noting that 87% of individually owned stocks and mutual funds are claimed by the top 10% of Americans. The top 1% of Americans alone own about half. One expert sees only good things ahead in the next earnings season if the economy stays strong and consumer spending keeps pace. "For those that are still holding onto the idea that the much-forecasted 2023 recession is right around the corner, they've missed an excellent 15 (if not 17) months in the stock market," Chris Zaccarelli at Independent Advisor Alliance tells Bloomberg. Meanwhile, markets are closed Friday for the Good Friday holiday. (More stock market stories.)
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