Global household wealth in 2022 grew at its lowest rate since 2008, but experts say it's probably just a blip in the global financial system.
"For the first time since the financial crisis of 2008."
Sounds pretty scary to me. Let's take a closer look at Credit Suisse's annual global wealth report.
The 3.4% household wealth growth in 2022 was the lowest rate recorded in any year this century apart from 2008. It was also the only year this century, other than 2008, in which the total value of household financial assets declined even when exchange rate changes are discounted. The key contributors to this situation were the reduced value of financial assets, a stronger US dollar and elevated inflation…
Fiscal and monetary policies undertaken in response to the COVID-19 pandemic, combined with the Russia-Ukraine war and other factors, have resulted in a rise in global inflation.
This persistent inflation has consequences for both global gross domestic product (GDP) and global wealth. In fact, in 2022 inflation reduced wealth growth by 6.0%, turning a nominal wealth gain of 3.4% into a real wealth loss of 2.6%.
Let's look at high income earners here and see how they did in 2022. Because we all know that's where a lot of this fluctuation is coming from.
The number of US dollar millionaires worldwide fell by 3.5 million during 2022 to total 59.4 million at year-end. This number includes 4.4 million "inflation millionaires" who would no longer qualify if the millionaire threshold were adjusted for inflation during 2022.
The ultra-high-net-worth (UHNW) group with wealth above USD 50 million had 22,490 fewer members by our estimate.
Not the best set of numbers there, is it?
I know we're not all in that tax bracket, but those numbers mean a lot in the grand scheme of things.
I told you at the top of the page that experts think this to simply be a blip in the system, so I'd better give you some details on that.
According to our projections, global wealth will rise by 38% over the next five years, reaching USD 629 trillion by 2027. Growth by middle-income countries will be the primary driver of global trends. We estimate wealth per adult to reach USD 110,270 in 2027 and the number of millionaires to reach 86 million while the number of ultra-high-net-worth individuals is likely to rise to 372,000.
All the talk of rising interest rates destroying our economy seem to have fizzled out at this point. It usually takes a while for those interest rate hikes to rock the market if they're going to, and that time is up if you ask me.
Looking forward to better days ahead.
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