Among all U.S. stocks, 89% are owned by the wealthiest 10% of Americans. According to new research, the post-pandemic stock market boom has increased income inequality in the U.S.
There was a renewed emphasis on the fact that equity markets are to blame for U.S. income inequality. Over $6.5 trillion in stocks and mutual funds were earned by the richest 1% of the population during the pandemic. In contrast, the other 90% of Americans made only $1.2 trillion in stock investments during the pandemic.
CNBC reported on the 18th that the surge in stock prices following the pandemic exacerbated income inequality in the U.S.
A large number of investors have entered the stock market after the launch of Robinhood, a free online trading platform with the theme of “democratizing stocks,”. In the last two years, the number of new Robinhood accounts has grown to over 22 million.
Stephen Rosenthal, senior fellow at the Urban-Brookings Institute for Tax Policy, noted that although tens of millions of new investors have joined, the average investment per Robinhood account is only $4,500.
Large income inequalities.
Federal Reserve statistics show the top 10% of income earners in the U.S. owned a record amount of stocks and mutual funds in the second quarter of last year. They own 89% of the stocks and mutual funds in the country.
During the pandemic, the main driver of income inequality was the difference in the volume of equity investment. According to the Federal Reserve, the top 1% of income earners own 32% of all wealth in the U.S. Furthermore, about 70% of their wealth growth over the past 18 months has come from stocks.
According to the Fed, between January last year and June, the value of the stocks of the top 10% rose by 43%, while the other 90% rose only by 33%.