Economists say the rising stock market is giving an added boost to consumer spending through what is known as the "wealth effect."

Key Points

  • The wealth of the top 1% hit a record $44.6 trillion at the end of the fourth quarter.
  • All of the gains came from stock holdings thanks to an end-of-year rally.
  • Economists say the rising stock market is giving an added boost to consumer spending through what is known as the “wealth effect.”

The wealth of the top 1% hit a record $44.6 trillion at the end of the fourth quarter, as an end-of-year stock rally lifted their portfolios, according to new data from the Federal Reserve.

The total net worth of the top 1%, defined by the Fed as those with wealth over $11 million, increased by $2 trillion in the fourth quarter. All of the gains came from their stock holdings. The value of corporate equities and mutual fund shares held by the top 1% surged to $19.7 trillion from $17.65 trillion the previous quarter.

While their real estate values went up slightly, the value of their privately held businesses declined, essentially canceling out all other gains outside of stocks.

  • KevonLooney@lemm.ee
    5·
    7 months ago

    Society is harmed because these people can buy up news and TV companies, donate unlimited amounts to politicians, and generally fuck with the economy. No one can tell them what to do because they have so much money.

    It seems like an aristocracy, which is very un-American. Once people run out of things to buy, how is their life affected by having more money? It essentially appoints them to a job they haven’t earned.

    There’s no reason why Elon should run Twitter. He has no experience in Social Media. Imagine someone you work with just purchased their position and didn’t have to interview or know anything about the field. Would you respect that person? Do you think they would do the job well? It would affect you, the company, and your customers negatively.

      • KevonLooney@lemm.ee
        3·
        7 months ago

        Once you have over $100 million dollars, earning money is not a matter of skill. It’s an inevitability. Compound interest will make sure you and your family are wealthy for generations, unless you pull an Elon.

        What I’m telling you is many of these people are bad stewards of capital. Gilded Age robber barons sucked for many other reasons, but they at least understood their industry. Carnegie or JP Morgan would have slapped most of these nepo-babies across the face.

        Imagine a sports team composed based on the amount of money people have. It would suck because people are not chosen based on skill. That’s how we’re choosing executive leadership in America right now, and it’s honestly stupid.

          • KevonLooney@lemm.ee
            2·
            7 months ago

            So your point is, you think someone should be able to buy a successful enterprise that’s important for society and run it into the ground? And you think that’s an argument in favor of billionaires?

            I’m saying the opposite. You should not be able to lose more than a billion dollars. Bets like that should rely on the judgment of many investors, hopefully people who have expertise in the industry.

            We don’t allow doctors or lawyers to practice without being educated and licensed. There need to be requirements for strategically important companies too.