Posted on 11/01/21
| News Source: CNBC
The wealthiest 10% of Americans now own 89% of all U.S. stocks held by households, a record high that highlights the stock market’s role in increasing wealth inequality.
The top 1% gained more than $6.5 trillion in corporate equities and mutual fund wealth during the Covid-19 pandemic, while the bottom 90% added $1.2 trillion, according to the latest data from the Federal Reserve. The share of corporate equities and mutual funds owned by the top 10% reached the record high in the second quarter, while the bottom 90% of Americans held about 11% of individually held stocks, down from 12% before the pandemic.
The stock market, which has nearly doubled since the March 2020 drop and is up nearly 40% since January 2020, was the main source of wealth creation in America during the pandemic — as well as the main driver of inequality. The total wealth of the top 1% now tops 32%, a record, according to the Fed data. Nearly 70% of their wealth gains over the past year and a half — one of the fastest wealth booms in recent history — came from stocks.
“The top 1% own a lot of stock, the rest of us own a little,” said Steven Rosenthal, senior fellow, Urban-Brookings Tax Policy Center.
The growing concentration of wealth comes despite millions of new investors coming into the stock market for the first time during the pandemic, leading to what many have labeled “the democratization” of stocks. Robinhood added more than 10 million new accounts over the past two years and now has over 22 million — many of them held by younger, first-time investors.