The next American wealth boom has officially begun.
It may not feel like it for many Americans. But with the Dow breaching 14,000, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession and attained levels of paper wealth they haven’t seen since the Roaring Oughts.
The stock market has gone from wealth destroyer to the nation’s largest manufacturer of new millionaires and billionaires. The market moves are creating a new virtuous cycle of confidence for the wealthy. A new survey from Spectrem Group shows that millionaire confidence in the economy hit the highest level in two years, led by their bullishness on the economy and corporate earnings.
The big question now is what the next Gilded Age will look like, who will benefit and how long the market-fueled prosperity will last.
The population of millionaires in America is now at or above its 2007 high. According to Spectrem Group, the wealth research firm, there are about 9 million American households with investible assets of $1 million or more.
The final tally for 2012 is not yet released, but George Walper, president of Spectrem Group, said he expects 2012 and 2013 to to approach, or even match the all-time high of 9.2 million in 2007.
“I don’t think it will go much beyond the all-time high because real-estate prices have not fully recovered,” Walper said. He added that after the tax rates for the wealthy were set in January, “they had a lot more confidence in how to plan and move forward.”
The population of individual millionaires (as opposed to households) rebounded to its all-time high two years ago. According to CapGemini, there were 3.35 million millionaires in North America in 2011, up from 3.2 million in 2007. Their total wealth in 2011 was just shy of the 2007 peak, at $11.7 trillion.
Other measures show a similar resurgence of wealth at the top. The total wealth of the Forbes 400 hit $1.7 trillion in 2012, topping the record of $1.58 trillion in 20008. The average net worth of the Forbes lister topped $4.2 billion – the highest ever.
There has been a massive reshuffling in the world of wealth, where millionaires and billionaires have fallen out of the top and been replaced by the freshly minted rich. Billionaires like hedge-funder Phil Falcone, real-estate tycoon Tim Blixseth and banking chief Sandy Weill fell off the Forbes list, while Facebook’s Mark Zuckerberg, Under Armour’s Kevin Plank and Spanx founder Sara Blakely burst on to the list after 2008.
Other members of the One Percent are returning after earlier collapses. Whether it’s Sheldon Adelson, the casino king who lost more than 90 percent of his paper fortune, then earned it back, or Netflix CEO Reed Hastings, who saw his fortune more than triple in recent weeks, the stock market is quietly restoring massive fortunes.
According to the Federal Reserve, the top one percent saw a turnover of more than a third between 2007 and 2009, meaning that a third of them fell off and were replaced by the new, new money.
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