In the early days of the pandemic, when markets plunged and 22 million Americans lost their jobs, the US Congress and the Fed jumped to work and began measures to stabilize the economy. Otherwise, she was in danger of collapsing. At the same time, no population group benefited more from these government measures than the one that, paradoxically, needed help the least, i.e. the ultra-rich.
Indeed, economic stimuli significantly supported stock markets, which also increased the value of private companies. Favorable conditions then supported the sale of companies and their mergers, which brought unexpected profits, which largely spilled over among the richest.
The uneven profits in the pandemic years are therefore to blame for the vastly different composition of net worth between individual strata of American society. Stocks and mutual funds accounted for more than a third of the assets of the wealthiest Americans at the start of the pandemic.
Flushes on the stock market burn the rich
Until recently, the richest one percent enjoyed the greatest increase in their wealth. For the bottom fifty percent of people, who owned virtually no stocks, there was zero growth. Therefore, people who could be described as middle class did not strengthen their financial portfolio nearly as much. Their biggest asset is usually their home, not a fat stock portfolio and a functioning business.
Wealth of the 100 richest Americans
In almost eight years when Bloomberg Billionaires Index tracks the 100 richest Americans, their combined wealth has grown by more than $1 trillion.
More than half of that went to just ten people: Jeff Bezos, Elon Musk, and eight others whose primary sources of wealth skyrocketed in value during the pandemic.
Fed data showed that last year, for the first time in at least three decades, America’s middle class controlled a smaller share of the wealth than just the top one percent.
According to the Realtime Inequality platform, created by economists from the University of Berkeley, the aforementioned government response to covid has sharply increased the pace of wealth accumulation for the richest. The net worth of the richest one percent increased by a third in the two years following the outbreak of the pandemic. The wealth of the richest 0.01 percent of them and the 0.001 percent grew even more, by more than 36 percent.
But now there is a significant turnaround. The dramatic fall in the markets this year will disproportionately affect the very richest. Now the shares of technology companies (and not only them) are crashing to the ground, taking with them the fortunes of dollar billionaires. Since November, the 100 richest Americans have lost $622 billion, the largest sustained loss in the index’s history.