The net worth of American households reached $168.8 trillion (about 24 quadrillion 9165 trillion 6800 won) in the third quarter of 2024, marking a 2.9% increase from the previous quarter and reaching an all-time high. The unemployment rate in February was 4.1%, a slight increase from January's 4.0%, but economists assess this is not a concerning level. Thus, the American economy is booming more than ever. However, the proportion of Americans who feel affluent is small. This is because the overall increase in wealth in the U.S. is concentrated among the upper class, driven by gains in stock and housing values. Despite a decrease in inflation and an increase in income, economic polarization in the U.S. has widened the gap in wealth and financial stability.
According to the nonpartisan Congressional Budget Office (CBO), the assets owned by the top 10% of households account for 69% of the net worth of American households. In contrast, the bottom 50% of households possess only 3% of wealth. Of course, the wealth of the bottom 50% households has increased in recent years. However, the increase in household net worth is based on rising housing prices and stock appreciation, which are difficult to easily convert into cash.
Reflecting this, the economic confidence of American households has not recovered to pre-pandemic levels despite an overall increase in wealth. Inflation concerns due to the tariff policies of the Donald Trump administration, along with worries about global supply chain disruptions, have worsened consumer sentiment. This phenomenon began before the stock market slowdown caused by tariff imposition concerns.
In particular, there appears to be a disparity in economic perception based on income levels. A study conducted by the University of Michigan over the past four years found that people in the bottom two-thirds of income are pessimistic about the economy. In contrast, the economic outlook of those in the top third of income has recently rebounded.
The cessation of subsidy payments received during the pandemic has also contributed to the perception that the economic situation has worsened. Thanks to subsidies from the federal government in 2020 and 2021, millions of households were able to pay off debts, save more, and enjoy a standard of living better than their usual income. However, the subsidy payments have ended, and living standards have decreased. As evidenced by a study from the JPMorgan Chase Institute tracking data from over 8 million account holders, purchasing power has declined between 2021 and 2023. The JPMorgan Chase Institute noted, "In addition to economic data measured in numbers, we must consider the mental and intangible aspects," adding, "Americans who are not wealthy, including the middle and working classes, perceive that their assets have fluctuated due to the pandemic and the subsequent subsidies."
Moreover, the explosion in housing prices since 2020 has heightened the perception among individuals that they are not affluent. About half of the net worth of the bottom 50% income group consists of real estate. While housing prices have increased, the inability to cash out has prevented them from covering rising food expenses. Additionally, rising interest rates and a shortage of housing supply have made it impossible to purchase a first home or move to another dwelling. The home ownership rate for adults under 35 peaked at 50% in 1980 and has now dropped to 30%. The real estate market has been frozen for nearly three years, impacting the economic outlook even for high-income households.
Above all, the threats of tariff imposition against the world by Trump since his inauguration on January 20 have contributed to rising concerns about recession and inflation. Goldman Sachs and Morgan Stanley adjusted their forecasts for U.S. gross domestic product (GDP) growth to 1.7% and 1.5% respectively in early March. JPMorgan predicted a 40% chance of recession for the U.S. this year. JPMorgan stated, "Concerns about the U.S. economy are heightened right now," and added, "If the mutual tariffs that Trump threatened to impose in April take effect, the risk of recession will rise to over 50%."