Record Number of Millionaires Marks a Divided American Economy

The American Dream has long been associated with financial success, and a recent report suggests that more Americans than ever are achieving millionaire status.

With 5.5 million millionaires now calling the United States home,¹ it’s clear that something significant is happening in the world of wealth accumulation.

But what lies behind this surge in seven-figure fortunes? Is it a testament to the strength of the American economy, or does it point to a growing divide between the haves and the have-nots?

The Rise of the Millionaire Class

The past decade has witnessed a staggering 62% increase in the number of American millionaires, outpacing the global average of 38%. This growth can be attributed to several factors:

• The thriving tech industry, with Silicon Valley and other tech hubs creating wealth at an astonishing rate.
• A bull market that has seen the Dow Jones Industrial Average and S&P 500 reach record highs. From 2010 to 2020, the S&P 500 delivered an annualized return of 13.6%.^(ref)
• Consistent retirement savings through 401(k) plans and IRAs, with over 485,000 accounts now exceeding $1 million. The average 401(k) balance for those 65 and older reached $270,000.^(ref)

A Closer Look at the Numbers

While the U.S. economy continues to dominate globally, with a GDP of $27.36 trillion, the distribution of wealth remains a contentious issue. The United States is home to:

• 37% of the world’s millionaires
• 9,850 centimillionaires (individuals with at least $100 million in assets)
• 788 billionaires

In contrast, China, with a larger population and a GDP of $17.7 trillion, has just 2,352 centimillionaires and 305 billionaires.

The Millionaire Landscape

New York City leads the pack with 349,500 millionaires, followed by the San Francisco Bay Area with around 305,000.^(ref) Other cities experiencing significant growth in their millionaire populations include:

• Austin, Texas: 110% increase between 2013 and 2023
• Seattle, Washington: 54,200 millionaires
• Emerging hotspots: Salt Lake City, Tampa, and Naples

Interestingly, while coastal cities still dominate, inland cities like Austin and Salt Lake City are seeing rapid growth in their millionaire populations due to lower costs of living and thriving local economies.

The Bigger Picture

While the increasing number of millionaires may seem like a positive indicator of economic growth, it’s crucial to consider the broader implications:

• Income inequality: The wealth gap between the rich and the poor continues to widen. In 2023, the top 1% of Americans owned 26.5% of the nation’s wealth, the middle 60% had 26%, and the bottom 20% only had 3%.^(ref)
• Affordability crisis: Rising costs of living and stagnant wages make it difficult for many Americans to make ends meet.
• Generational wealth disparities: Younger generations face unique challenges in building wealth compared to their predecessors.

As we celebrate the success of America’s millionaires, let us not forget the importance of creating a more inclusive and equitable economy for all.

Policymakers must address the root causes of inequality and work towards ensuring that the American Dream remains accessible to everyone, regardless of their background or circumstances.

Source:

1. Henley & Partners