Median wealth increases, but U.S. still stuck at #27 in world
The new Global Wealth Report and Global Wealth Databook from Credit Suisse were released last week. According to the Report (p. 3),
Global wealth has reached a new all-time high of USD 241 trillion, up 4.9% since last year and 68% since 2003, with the USA accounting for 72% of the latest increase. Average [mean] wealth per adult reached a new all-time high of USD 51,600, with wealth per adult in Switzerland returning to above USD 500,000.
For the United States, this represents an increase in mean wealth per adult of 11.4% from mid-2012 to mid-2013 (Databook, p. 92). Median wealth per adult increased even faster, from $38,786 to $44,911, or 15.8%, although we should recall that measurement of median wealth is less reliable than that for mean wealth.
Nonetheless, while these data represent improvement for the typical American, there was no change in our ranking relative to the rest of the world. While Kuwait and Cyprus fell below the U.S., Slovenia and, more surprisingly, Greece now have higher median wealth per adult. Thus, the United States remains only 27th in the world.
These data are significant for at least two reasons. First, they highlight the fact that while the United States has a higher gross domestic product per capita than all but four of the 26 countries ahead of it in median wealth per adult (Qatar, Luxembourg, Singapore, and Norway), the long-term trend of economic policies has clearly hurt the middle class. Inequality is a big part of the explanation here: mean wealth per adult in the U.S. is 6.7 times median wealth per adult, the highest ratio in the top 27. By contrast, in #1 Australia the mean-to-median ratio is only 1.8:1. In fact, this ratio is less than 3:1 for 19 of the 26 countries with higher median wealth per adult. In Slovenia, mean wealth per adult is less than 1.5 times median wealth per adult! (All figures calculated from Databook, Table 3-1.)
Second, these low levels of wealth contribute to the coming retirement crisis of the middle class. Americans have low levels of saving, while Social Security still looks vulnerable to the chopping block despite our already high level of elder poverty.
Here are the top 27 countries by median wealth per adult.
Country Median Wealth Per Adult
1. Australia $219,505
2. Luxembourg $182,768
3. Belgium $148,141
4. France $141,850
5. Italy $138,653
6. United Kingdom $111,524
7. Japan $110,294
8. Iceland $104,733
9. Switzerland $ 95,916
10. Finland $ 95,095
11. Norway $ 92,859
12. Singapore $ 90,466
13. Canada $ 90,252
14. Netherlands $ 83,631
15. New Zealand $ 76,607
16. Ireland $ 75,573
17. Spain $ 63,306
18. Qatar $ 58,237
19. Denmark $ 57,675
20. Austria $ 57,450
21. Greece $ 53,937
22. Taiwan $ 53,336
23. Sweden $ 52,677
24. United Arab Emirates $ 51,882
25. Germany $ 49,370
26. Slovenia $ 44,932
27. United States $ 44,911
Source: Credit Suisse Global Wealth Databook, Table 3-1
Recent article in the NYT: http://news.yahoo.com/us-wealth-gap-between-young-old-widest-ever-050259922.html “US wealth gap between young and old is widest ever”
While it looks at the young versus old, it does emphasize another aspect of what you are writing about on wealth. The college education trap and the costs of it has placed a large monetary burden on the young which prevents them from setting money aside for retirement or savings over the long term, results in lesser market demand for goods due to less income, etc. What has come out of the student loan debate in Congress has done little to slow the increased burden of student loans after graduation. 66% of the ~$1 trillion is held by those 39 years and younger. This is the time when many should be enjoying the results of increased wealth due to income growth.
“The 47-to-1 wealth gap between old and young is believed by demographers to be the highest ever, even predating government records.
In all, 37 percent of younger-age households have a net worth of zero or less, nearly double the share in 1984. But among households headed by a person 65 or older, the percentage in that category has been largely unchanged at 8 percent.
While the wealth gap has been widening gradually due to delayed marriage and increases in single parenting among young adults, the housing bust and recession have made it significantly worse.
For young adults, the main asset is their home. Their housing wealth dropped 31 percent from 1984, the result of increased debt and falling home values. In contrast, Americans 65 or older were more likely to have bought homes long before the housing boom and thus saw a 57 percent gain in housing wealth even after the bust.”