Global wealth rises but millennials worse off

Although global wealth has risen rapidly and at a record rate over the past five years—by more than 6% in the one year from June 2016 to June 2017—the world’s people have not benefited equally from this increase.  In fact the rise in wealth overall has ended up making the divide between rich and poor wider in many cases, as described in an article in The Economist recently, “Global Wealth: Millennials’ Missing Millions.” The article summarizes findings from a study by the Credit Suisse Research Institute about global wealth trends and bringing attention to these disturbing trends.

Unfortunately the fact that wealth is in the hands of a few is one of the top findings in the report: the richest 1% of people in the world hold as much as half of the world’s wealth. Of course, the trends are different by country. There are more millionaires in the United States than anywhere else on earth: 43% of total millionaires, according to the report. Other developed countries have more millionaires than other places. But some emerging economies are also becoming home to a growing number of millionaires. Emerging economies are now home to more than 8% of all of the world’s millionaires.

What is also interesting in the study findings as reported by The Economist article is that some countries increased their share of global wealth in the last year much more rapidly than other countries because of changes in their currency exchange rates and performance of companies traded on their stock markets. These countries include South Africa, Poland, and Israel. This makes me wonder what will happen to the “wealth” increases these countries have enjoyed when their currencies depreciate or their stock markets decline? This does not seem to be a very stable or real form of increased wealth.

Another main finding of the Swiss study reported in The Economist is that adults ages 30-39 in the U.S. (older millennials) have gained 46% less wealth than people in this age group did ten years ago.  One likely cause of this according to the article is the high student debt levels that people in their thirties often still have in the U.S., which affects negatively their ability to save, buy a house and overall have a better quality of life. This seems to show that people in the U.S. are not “investing in the future” in a way that helps benefit the majority of people.

 

Credit Suisse Research Institute, Global Wealth Report 2017, November 14, 2017.

“Global Wealth: Millennials’ Missing Millions,” The Economist, November 16, 2017.