If the Economy is So Bad, Why Do So Many People Have So Much Money? by Scott Stolz, CFP, RICP (week 56)

 

Multiple recent studies have found that approximately three out of every four Americans think the economy is only doing “fair” or “poorly.”  Gallup recently reported that 44% of Americans think the economy is “poor”.  Only 22% think it’s either excellent or good.  Two in three Americans also think the economy is getting worse.  (U.S. Economic Confidence Improves in July).  This negative view has generally persisted since Covid.

The image is a graph depicting the Gallup Economic Confidence Index, showing Americans' assessment of current economic conditions and future economic outlook, ranging from -100 to +100, for the years 2020 to 2026. AI-generated content may be incorrect.

This is probably not surprising news to anyone.  It’s hard to pick up a newspaper without finding at least one if not multiple articles about higher costs, new layoffs, problems with Social Security, etc. (well, it is hard to actually “pick up” a newspaper, but you know what I mean).  And since bad news sells better than good news, news stations love to talk about how bad things are.

But is it really true?  The Federal Reserve recently reported that baby boomers and the silent generation are now sitting on $110 trillion in wealth.  In addition, the younger generations now have another $65 trillion in wealth, an increase of 40% since the economy started doing “poorly” in 2020.

Things certainly do cost more but record stock and real estate prices have added a tremendous amount of wealth over the last 15 years.  Much has been written about how most of this wealth goes to just the top 10%.  I have no doubt that is indeed the case.  But as I sit here at Lake of the Ozarks in the middle of Missouri, I stare out at one 4000+ square foot house after another, most of which have a 30+ foot boat sitting in their $200,000 dock.  Either much of the top 10% live here at the lake, or there are many more people with substantial wealth than the numbers would indicate. 

It will be interesting to see what happens to all of this money.  Us baby boomers are not getting any younger.  There is no way more than a small portion of this wealth is going to be spent in our lifetime.  That’s going to be a lot of wealth transferring to younger generations. 


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