The Federal Reserve provides information on the distribution of U.S. household wealth in the form of interactive charts and tables. These allow users to explore household wealth components, shares and levels across various groups and time. The information was last updated in September 2023. This post will cover wealth assets and trends by income group. Here’s the chart of assets by income:
A very brief explanation of terms: the five main categories of real estate are residential, commercial, industrial, raw land, and special use properties such as private schools and museums. Corporate equities are ownership shares of joint-stock corporations. A stock market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses. Stocks are an investment in a single company, whereas mutual funds have many investments, such as stocks and bonds, in a single fund. Defined benefit pension plans promise a specified monthly benefit at retirement, whereas contributed benefit plans do not. Private business assets are items of value that one’s business owns or creates, including cash, inventory, equipment, buildings and intellectual property. Other assets include cash, art, collectibles, vehicles, etc.
Here’s the trends-by-income chart:
Take-away: Over the last three decades, the upper-middle-class and above (60%+ by income) have done rather well wealth-wise. The middle class (40-60%) have done ok, but below that - not ok. A question I have is how much wealth-stagnation in the lower income groups has to do with education and marriage trends. Specifically, age at first marriage has increased by six years since 1990 and the percentage of Americans with four-year college degrees or higher has almost doubled, from 21% in 1990 to 38% in 2022. As a consequence of these trends, young adults make up more of the lower portions of the income and wealth distributions than they used to. But their relative lack of income and wealth is not necessarily a bad thing, because many are spending their time wisely: acquiring the experience, skills and knowledge to make up for lost time, when they’re good and ready. First, school and play, then career and spouse, eventually kids and a house. And for most Americans, the house is the main source of wealth.
Next: wealth and age