Average Americans Grow Poorer As U.S. Per Capita Wealth Reaches New High

Average Americans Grow Poorer As U.S. Per Capita Wealth Reaches New High

Despite a near doubling of total wealth in America over the past ten years, the typical American’s net worth has actually fallen by over a third. American total wealth per person soared to over $309,000 by September 2014, up over 38% from its post-crisis low in 2009. The median American household saw its total assets fall by 36% from 2003. Over the same time period, the total wealth in the United States grew by over 80%.  With total wealth growing and median wealth declining, the average American’s nest egg is getting smaller and smaller despite greater wealth per person in the country. A Credit Suisse study from earlier this year showed that an American’s median net worth was just $45,000. In other words, the typical American has total assets that are just 15% of the actual per capita wealth in the United States. At the same time, the average millionaire in the United States has $50 million in total assets.

 

Economy Watch

Per Capita Wealth Of Americans Rises to $309,000 While Median Wealth Shrinks to $45,000

America is richer than it has ever been in human history, according to a study by the Federal Reserve.

According to the Federal Reserve’s measurement of households and nonprofit organizations’ total assets (HNOTASQ027S), American total wealth per person soared to over $309,000 by September 2014, up over 38% from its post-crisis low in 2009.

In total, Americans own over $95 trillion in assets. Over 70% of those holdings are financial assets held in instruments like common stock, bonds, and other asset-backed securities.

Average American’s Share Falls

While America as a whole is getting wealthier, the average American’s share of those assets is declining. Despite a near doubling of total wealth in America over the past ten years, the typical American’s net worth has actually fallen by over a third.

A study by economists at the University of Michigan for the Russell Sage Foundation showed that, in 2013, the median American household saw its total assets fall by 36% from 2003. Over the same time period, the total wealth in the United States grew by over 80%.

With total wealth growing and median wealth declining, the average American’s nest egg is getting smaller and smaller despite greater wealth per person in the country. A Credit Suisse study from earlier this year showed that an American’s median net worth was just $45,000. In other words, the typical American has total assets that are just 15% of the actual per capita wealth in the United States.

At the same time, the average millionaire in the United States has $50 million in total assets.

Debt, Wealth Per Capita

In light of the growing divergence between mean and median wealth in the United States, economists have begun to debate how to understand the government’s budget deficit and the total public debt owed by the U.S. government.

By the end of September, the U.S. government owed $17.7 trillion in total, or roughly $186,000 per American citizen. Seeing the national debt as a ratio of debt to median net worth, America would appear to be unsustainably in debt, with $4.13 owed for every dollar saved.

By comparing the national debt to average net worth, however, America’s debt load appears substantially more manageable, with 60 cents owed for every dollar saved.

This debt-to-equity ratio is substantially healthier than other per capita measures of wealth and debt. For instance, per-capita personal debt is over $52,000, according to the Federal Reserve, while savings per capita is slightly over $2,000.

While economists have spent little effort to project whether and how median and average incomes will converge in the coming years, the issue is attracting greater attention. Growth in labor income is a key factor in the trend, although real incomes have remained largely stagnant in the United States. On Monday, the Bureau of Economic Analysis announced that personal incomes rose 0.3% in August, and disposable personal income rose $35.2 billion, or roughly $117 per person.

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