Money

How the Composition of Wealth Differs, from the Middle Class to the Top 1%

Published

4 years ago

May 8, 2019

Nick Routley

A Breakdown of Wealth, from Middle Class to the Top 1%

Just as household wealth varies greatly across the population, the composition of that wealth changes as well. Simply put, the person next to you at the grocery store will likely have a much different asset mix than, say, Warren Buffett.

Today’s chart breaks down the differences in the composition of wealth between middle income, upper income, and ultra wealthy (top 1%) of American households to help us better understand the building blocks that make up net worth. Let’s dive in.

Middle Income: Home is Where the Wealth is

It’s no surprise that the principal residence is the cornerstone of net worth for most Americans in the middle class. For households that fall in this wide range ($0 to $471k of net worth) the combination of housing and pension accounts make up nearly 80% of total wealth on average.

Assets like stocks and mutual funds only make up about 4% of wealth in this income bracket, partially mirroring the trend of lower stock market participation in recent years.

As we move up the income ladder, however, this situation changes quite a bit.

Upper Income: A Diversified Portfolio

If a household has a net worth that ranges between $471,000 and $10.2 million, it is considered to fall in the upper income band above. This represents the 20% richest households in the U.S., minus the top 1%, which are put in a separate bracket.

For this group, the principal residence makes up a smaller slice of the wealth pie. Instead, we see a higher mix of financial assets like stocks and mutual funds, as well as business equity and real estate. Almost half of households in this group own real estate in addition to their principal residence.

As households become wealthier, we tend to see a lower share of liquid assets as compared with the other components of net worth.

The Top 1%: The Business Equity Bulge

In the richest 1% of households, the principal residence makes up a mere 7.6% of assets. At this stage, almost half of assets fall under the category of business equity and real estate.

A prime example of this is Jeff Bezos. The lion’s share of the Amazon founder’s net worth is tied to the value of his company. Another example is President Trump, whose sprawling real estate empire comprises two-thirds of his estimated $3.1 billion net worth.

One of the more prominent features of the ultra rich wealth bracket is a much higher level of financial asset ownership. In fact, the top 1% of households own over 40% of stocks.

stock ownership by wealth bracket

As well, this tiny group of ultra wealthy households earns 22% of total income, up from 8% in the 1970s.

Related Topics:the 1%wealth composition household wealth

Up Next

How Equities Can Reduce Longevity Risk

Don't Miss

The Anatomy of a Market Correction

Click for Comments

Economy

Charted: Public Trust in the Federal Reserve

Public trust in the Federal Reserve chair has hit its lowest point in 20 years. Get the details in this infographic.

Published

2 weeks ago

May 23, 2023

Marcus Lu

The Briefing

Gallup conducts an annual poll to gauge the U.S. public’s trust in the Federal Reserve
After rising during the COVID-19 pandemic, public trust has fallen to a 20-year low

Charted: Public Trust in the Federal Reserve

Each year, Gallup conducts a survey of American adults on various economic topics, including the country’s central bank, the Federal Reserve.

More specifically, respondents are asked how much confidence they have in the current Fed chairman to do or recommend the right thing for the U.S. economy. We’ve visualized these results from 2001 to 2023 to see how confidence levels have changed over time.

Methodology and Results

The data used in this infographic is also listed in the table below. Percentages reflect the share of respondents that have either a “great deal” or “fair amount” of confidence.

Year	Fed chair	% Great deal or Fair amount
2023	Jerome Powell	36%
2022	Jerome Powell	43%
2021	Jerome Powell	55%
2020	Jerome Powell	58%
2019	Jerome Powell	50%
2018	Jerome Powell	45%
2017	Janet Yellen	45%
2016	Janet Yellen	38%
2015	Janet Yellen	42%
2014	Janet Yellen	37%
2013	Ben Bernanke	42%
2012	Ben Bernanke	39%
2011	Ben Bernanke	41%
2010	Ben Bernanke	44%
2009	Ben Bernanke	49%
2008	Ben Bernanke	47%
2007	Ben Bernanke	50%
2006	Ben Bernanke	41%
2005	Alan Greenspan	56%
2004	Alan Greenspan	61%
2003	Alan Greenspan	65%
2002	Alan Greenspan	69%
2001	Alan Greenspan	74%

Data for 2023 collected April 3-25, with this statement put to respondents: “Please tell me how much confidence you have [in the Fed chair] to recommend the right thing for the economy.”

We can see that trust in the Federal Reserve has fluctuated significantly in recent years.

For example, under Alan Greenspan, trust was initially high due to the relative stability of the economy. The burst of the dotcom bubble—which some attribute to Greenspan’s easy credit policies—resulted in a sharp decline.

On the flip side, public confidence spiked during the COVID-19 pandemic. This was likely due to Jerome Powell’s decisive actions to provide support to the U.S. economy throughout the crisis.

Measures implemented by the Fed include bringing interest rates to near zero, quantitative easing (buying government bonds with newly-printed money), and emergency lending programs to businesses.

Confidence Now on the Decline

After peaking at 58%, those with a “great deal” or “fair amount” of trust in the Fed chair have tumbled to 36%, the lowest number in 20 years.

This is likely due to Powell’s hard stance on fighting post-pandemic inflation, which has involved raising interest rates at an incredible speed. While these rate hikes may be necessary, they also have many adverse effects:

Negative impact on the stock market
Increases the burden for those with variable-rate debts
Makes mortgages and home buying less affordable

Higher rates have also prompted many U.S. tech companies to shrink their workforces, and have been a factor in the regional banking crisis, including the collapse of Silicon Valley Bank.

Where does this data come from?

Source: Gallup (2023)

Data Notes: Results are based on telephone interviews conducted April 3-25, 2023, with a random sample of –1,013—adults, ages 18+, living in all 50 U.S. states and the District of Columbia. For results based on this sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. See source for details.