We have our good pal DJ Feddy Fed to thank for high interest rates. 💿📈 Borrowing costs are at historic highs, but older, wealthy Americans could play a huge part in this game. 👩🏻🦳
Old rich peeps have benefited from booming stock and housing markets. They’re spending their cash on travel, entertainment, and healthcare bills, which keeps prices at their high points. Thanks, Ethel. 🎰
Let’s take a look at some recent stats on the economy and American wealth.
Here’s Five Fast Facts on the impact of affluent Americans:
- 🆙 What an Uprising - Although the Fed’s interest rate hikes made borrowing money more expensive, home values and stock prices also rose, making the rich even richer. In the ten years after the 2008 recession, household wealth grew around 5.5% per year. Since 2018, it’s zoomed up to 9% annually.
- 📈 We Luv Stonks - If we look at the S&P 500 index, stock prices are roughly 72% higher than they were five years ago. Between the end of 2018 and 2023, the Fed reports home values jumping up 58%. Americans’ wealth went from $98T at the end of 2018 to $147T just five years later. Even with an inflation adjustment, that’s a noteworthy increase.
- 🕳️ The Great Gap-sby - The wealthiest 10% of Americans own two-thirds of the country’s household wealth, and the gap between rich and poor is widening. Median household wealth jumped 37% between 2019 and 2022 ($193,000). That’s the biggest recorded increase since the 80’s.
- 🛳️ Cruises and Casino Trips - Americans 55 and older now own almost 75% of all household wealth. According to Fed data, that’s up from 68% in 2010. Americans 65 or over were responsible for 22% of consumer spending in 2022 (another record-breaker), up from about 16% in 2010.
- 😴 Dream On - Have you yelled at a Boomer today? We joke, but Americans who already own houses and cars aren’t as impacted by rising interest rates compared to the younger crowd. So, it looks like sky high home prices and mortgage rates are keeping the American dream of buying a first home…just a dream.
🔥Bottom line: Fun fact: Royal Caribbean just announced huge earnings and a literal boatload of demand. Maybe if we stop talking smack about the Boomers, they’ll invite us on their next cruise (and we’ll leave them at a random port of call!). Oh, one last thing, are you confused by the latest jobs reports? Let us demystify things for you here.
How have you been impacted by inflation and our current economy?
Let us know by connecting with us on Facebook and Instagram! Also, remember to share this newsletter with your friends & coworkers!
Btw, If you’ve read this far and haven’t yet signed up for the weekly Paycheckology newsletter, CLICK HERE!
