Amidst headlines of high unemployment and housing foreclosures, there is one demographic that has been doing well in the past year.
Households with a net worth of $1 million or more grew by 16% in 2009, up from a 27% decline in 2008, according to a study by Spectrum Group. But what effect will this have on the rest of us?
Sign of Economic Recovery?
While at first glance it may seem like a growing millionaire class in the face of a double digit unemployment rate is a demonstration of our countries income inequality, many economists are hoping that this increase in millionaires could be a good sign for the economy. Although the number of millionaires is still far below the 2007 pre-recession level of 9.2 million, the fact that there are more millionaires in 2009 signifies a recovery of the stock market.
George H. Walper, Jr., the President of Spectrum Group, was cited by CNNMoney as saying that this number can largely be attributed to the rebounding stock market, as other sources of asset increases such as real estate have not shown as dramatic a recovery. The Dow Jones Industrial Average has grown 61% in the past 12 months.
The millionaires sector of the population controls an estimated 70 percent of total U.S. assets, and so their financial decisions exert a large influence on the economy, according to Walper. While there are more millionaires today, it will take some more obvious changes in our economy, including higher employment rates, before these large economic players begin to loosen up some of their assets and begin injecting it into the economy.