“Uncertainty” continues to be the overarching idea in the current economy, as the end results of COVID, the lockdown, and the presidential election remain to be seen. Things appear much less uncertain, however, for America’s top earners, as the Wall Street Journal reports. Drawing on research from Wealth-X, the Journal finds the America’s top earners have recovered a surprising amount of the losses sustained in the first quarter.
These “ultrahigh-net-worth individuals”, those with a net worth greater than or equal to $30 million, have already made back a large percentage of the collective wealth which they lost in March. As of August, these top earners in the U.S. were worth a combined $12.5 trillion dollars, an increase of 37% from the end of March.
This represents quite a significant recovery, as it is only down 3% from the end of 2019. It is also outpacing the recovery of the ultra-wealthy in other parts of the world, considering that overall global wealth is still far from pre-COVID levels, down 9% from the end of 2019.
This is a strong indication of the K shaped nature of the current recovery. People who were well off to begin with have already recouped a great deal of the losses suffered in March and April. Lower income demographics, on the other hand, face a highly volatile job market and an eventual end to CARES Act style stimulus. A major contributing factor, as experts at Wealth-X point out, is that a great deal of the wealth of ultrahigh-net-worth individuals is tied to the stock market, which is coming close to recovering and even surpassing where it was back in February.
Recovery among this sort of demographic is also highly localized in a handful of major metropolitan areas. Of the 104,440 North Americans worth $30 million or more, 10,435 of them live in New York City and more than 6,000 in L.A, the two American cities with the highest concentration of ultra-rich individuals.
This has an upside for real estate in such notoriously expensive cities, both of which are seeing mass exoduses of people. The same Wall Street Journal article also reports that while the overall housing market in New York City is down 46.3% this quarter over the same time last year, houses $5 million and over are faring somewhat better. This gives some hope to the struggling New York housing market.