Are the very rich, as F. Scott Fitzgerald would have it, “different from you and me”? A new report from Credit Suisse takes a look at global household wealth and finds rising global wealth, but also rising inequality. The Global Wealth Report 2014 notes:
“The overall global economy may remain sluggish, but this has not prevented personal wealth from surging ahead during the past year. Driven by healthy housing markets and robust equity prices, total wealth grew by 8.3 percent worldwide to reach $263 trillion, the first time household wealth has passed the $250 trillion threshold.”
Household wealth, defined as “the value of financial assets plus real assets (principally housing) owned by households, less their debts,” has risen strongly since the global financial crisis, as markets and home values have recovered. But wealth inequality also appears to be rising, suggesting that many of the gains have been accrued by the wealthiest cohort.
One reason for the difference among low, middle and high wealth levels has to do with where household wealth is concentrated. The Credit Suisse report notes that, at lower wealth levels, the largest share of household wealth is held in savings accounts, while at middle wealth levels, the largest share of household wealth is the family home — and movements in home values have a big impact on the wealth of the middle. The highest wealth levels, however, have their wealth concentrated in businesses, whether private equity or listed shares, and the recent run-up in the stock market seems to have disproportionately affected the wealth of the very rich.
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Loretta Clodfelter is production and copy editor with Institutional Real Estate, Inc.
