Total household wealth fell for the first time last year since the 2008 financial crisis, as interest rates climbed and inflation remained persistently high.
That may sound like bad news, but the data reveal a different story, reports CNN.
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According to the annual Credit Suisse and UBS global wealth report, the total value of all private wealth in the world declined 2.4 percent to $454.4 trillion. Much of this was due to losses in the stock and bond markets, which disproportionately impacted wealthy individuals, it said.
Meanwhile, worldwide median wealth, a more accurate estimate of how the average individual is doing, increased by 3 percent in 2022.
In sum, the ordinary person got a lift while millionaires and billionaires suffered a hit – a phenomenon known as a “rich-cession.”
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The study defines net worth or “wealth” as the value of a household’s financial and real assets.
Because of the drain on wealth at the top, the world presently has 3.5 million fewer millionaires in US dollar terms than it had in 2021, for a new total of roughly 60 million, said the report.
Some nations lost more millionaires than others, with the United States losing 1.8 million in total. The United States also lost the most “ultra-high net worth individuals” (17,260) with wealth over $50 million, it said.
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The combination of a rise in the median and a fall at the top suggests that inequality has decreased. In any case, only somewhat. The wealthiest 1 percent of households still own a whopping 44.5 percent of global wealth. This is a modest decrease from 45.6 percent in 2021, it added.
“The global economy is experiencing a period of astonishing economic alteration,” wrote Paul Donovan, chief economist at UBS Global Wealth Management, in the report. (UBS acquired Credit Suisse earlier this year.)
According to Credit Suisse, global wealth will increase by 38% over the next five years, hitting $629 trillion by 2027. Notably, that expansion will very certainly be led by middle-income nations, said the report.