Many Americans have seen an increase in wealth in the years after the epidemic, owing to a thriving stock market and rising home values. But during the previous five years, workers under 40 did significantly better than other demographic groups.
(Photo : by Spencer Platt/Getty Images)Many Americans have seen an increase in wealth in the years after the epidemic, owing to a thriving stock market and rising home values. But during the previous five years, workers under 40 did significantly better than other demographic groups.
A recent report from the Federal Bank of recent York shows that Americans between the ages of 18 and 39 have had an 80% growth in wealth since 2019, while those between the ages of 40 and 54 have seen a 10% gain and those over 55 a 30% increase.
The research indicates that older Americans tend to move their investments away from stocks and into less volatile assets as they approach retirement, whereas younger workers probably saw their assets expand so dramatically because they invest more heavily in mutual funds and stocks.
They also pointed out that because they are the poorest generation in the country, those under 40 also benefited more from stimulus funds during the epidemic. Researchers have discovered that some of those young workers invested their stimulus payments on the stock market.
That probably contributed to this group's recent wealth growth. With the exception of the 2022 bear market, the stock market has performed well from January 2019. During that period, the S&P 500 has more than doubled.
Based on the data, those under 40 possessed around $5.1 trillion in wealth as of the beginning of 2019. That figure shot up to $8.9 trillion by July 2023.
The results are consistent with the Federal Reserve's Survey of Consumer Finances, which published data in October and stated that the median net worth of those under 35 increased to $39,000 in 2022 from $16,000 in 2019. Wealth per person was not included in the New York Fed report.
However, the researchers noted that despite these advances, the under-40 population still only owns a small portion of the country's total wealth.
Despite making up around 37% of the population, younger Americans owned only 4.9% of the country's wealth at the beginning of the epidemic. According to the data, younger workers are still far behind elder Americans, despite an 80% increase in income, the researchers said.
Those over the age of 55, for example, held over $74.5 trillion in wealth at the beginning of 2019. That proportion increased by 30% by July 2023 to $97.3 trillion, or more than ten times the wealth possessed by those under 40.
The data indicates that even middle-aged Americans, whose asset development during the epidemic trailed behind that of both younger and older workers, are still significantly wealthier than those under 40. In early 2019, workers aged 40 to 54 possessed around $24.5 trillion in wealth; by July 2023, that sum had increased by roughly 10% to $27.3 trillion.
The New York Fed discovered that since 2019, the racial wealth disparity has gotten worse in a related research that was released on Wednesday.
According to the data, at the beginning of 2019, White households accounted for around 92.4% of all wealth in the United States, while Hispanic households owned 2.7% and Black families controlled 4.9%.
White households witnessed a about 28% increase in wealth during the epidemic, while the value of Hispanic families' assets increased by around 20%. Over the previous five years, assets owned by Black families lost almost 1.5% of their value, resulting in a decrease in their wealth.
The researchers pointed out that the explanation could have to do with the kinds of assets that these various groups are more likely to own. For instance, pensions, whether conventional or through 401(k)s and other defined contribution plans, account for more than half of the financial wealth owned by Black households.
They also out that white families are more likely to invest in mutual funds, enterprises, and stocks. Those families may have witnessed an increase in their investment mix since stocks fared well throughout the epidemic.
