Number of millionaires increased in 2009, report says
NEW YORK — Unemployment remains at near-record levels, and most Americans are struggling to rebuild their battered finances. But the country's wealthy are once again doing just fine, thank you.
No group was immune to the downturn. In 2008, as the financial crisis raged, the stock market hit bottom and the Great Recession ate into the economy, the number of millionaires in the United States plunged.
But last year the number of millionaires bounced up sharply, new data show.
And after that decline and rebound, the millionaire class held a larger percentage of the country's wealth than it did in 2007.
"It's been a recession where everyone took a hit — with the bottom taking a bigger hit," said Timothy Smeeding, a University of Wisconsin professor who studies economic inequality. But "the wealthy alone have bounced back."
The return of the millionaires last year was not limited to the United States. China saw the swiftest growth in millionaires, and now has the third-most of any country, trailing the U.S. and Japan, according to the data released Thursday by Boston Consulting Group.
The consulting firm's latest report on wealth, one of the first broad depictions of how wealth shifted in 2009, indicates that the number of U.S. households with at least $1 million in "bankable" assets climbed 15 percent last year to 4.7 million after tumbling 21 percent in 2008.
"Assets have recovered much faster than we expected, to be candid," said Monish Kumar, a managing director at Boston Consulting Group.
The rebound largely reflects the stock market's powerful surge from 12-year lows reached in March 2008. Even though the long bear market that began in late 2007 continued into early last year, the Dow Jones industrials gained 19 percent over the course of 2009.
As a result, the expansion of the portfolios of the rich resembled the quick recovery of the profits of Wall Street investment banks and the bonuses of their executives, both of which depend on the health of the stock market.
The boom didn't reach all parts of the population. For the middle class, home values account for a larger slice of a family's wealth than they do for the rich. And unlike stocks, home values remain at or near the lows they reached after a painful crash.
In fact, real estate and other hard assets, such as $200,000 cars, aren't reflected in Boston Consulting Group's report. Had they been, the financial condition of ordinary Americans would have appeared even worse.
The Federal Reserve reported Thursday that the net value of real estate owned by U.S. households fell again in the first three months of this year after sinking a total of $7.7 trillion in 2007-09.
Moreover, among the less-than-rich, unemployment emerged as a powerful force in depleting assets. The jobless rate rose to 10 percent at the end of 2009 after starting the year at 7.7 percent.
Still, thanks to the stock market, Americans' collective net worth, including home equity, managed to grow 4.3 percent last year and 2 percent in the first quarter of 2010, the Fed reported.
But the consulting firm's report showed an increase in the concentration of wealth in the last two years. In the U.S., the number of millionaires in 2009 remained 10 percent lower than in 2007, but the percentage of Americans' total wealth held by those households was slightly higher, at 55 percent, according to the consulting firm.
"The recession is going to end up accentuating the inequalities of income and wealth we've seen for 30 years," said Larry Mishel, president of the Economic Policy Institute in Washington. "This requires attention if we're going to see robust wealth growth going forward."
In many other countries, the wealth held by millionaires has already returned to levels reached before the crisis. That's because rich Americans before the bear market had more of their money invested in stocks than did the wealthy in other countries.
Even though the wealthy have bounced back, many have still not regained their trust in the financial system and remain wary of the stock market, said Bruce Holley, a consultant in Boston Consulting's New York office.
"It doesn't feel to them like they are fully back in business," Holley said.