Covid crisis and wealth distribution inequality in the United States
The International Monetary Fund analyses how the increase in net wealth since the beginning of the pandemic has been distributed in the United States, finding that the bulk of the increase in net wealth during the pandemic was to the top 1% richest households, whose net wealth rose by nearly 35%, compared to a modest 5% increase for households in the bottom 50%.
Key points of the analysis:
- The increase in net wealth was much larger during the pandemic than during normal times (between the end of 2014 and end of 2019).
- Driven by higher saving, due to lower consumption during lockdowns and social restrictions, and booming equity markets and housing prices.
- Net wealth of the top 1 percent richest households in the United States rose by nearly 35% compared to a modest 5% increase for households in the bottom 50 percent.
- Some explanations to this may be that the equity and housing price boom mostly benefitted the rich, while lockdowns more heavily affected spending on dining and travel, also part of wealthier households’ consumption habits, generating higher savings.