The past three months have been financially painful for many Americans – but not for billionaires.
US billionaires have become $565 billion richer since March 18, according to a report published Thursday by the Institute for Policy Studies, a progressive think tank.
Total wealth for billionaires now stands at $3.5 trillion, up 19% from the low point near the beginning of the pandemic, the report said. Amazon boss Jeff Bezos alone is worth $36.2 billion more than he was on March 18.
Since that day, nearly 43 million Americans have filed for initial unemployment benefits. Lower-income workers, especially in travel and service-sector jobs, have been hit particularly hard by the health crisis.
The numbers put an exclamation point on the deep divide between haves and have-nots that is helping to fuel unrest across the United States. Wealth inequality is likely to get even worse because of this crisis, experts say.
The acceleration of wealth for the richest Americans is being driven by the remarkable recovery of the stock market, which has skyrocketed in large part because of unprecedented action from the Federal Reserve.
“The stock market taking off — and decoupling from the real economy — is exacerbating inequality,” said Kristina Hooper, chief global market strategist at Invesco.
Big Tech is thriving
Despite the turmoil on the streets of US cities and a record 43 million Americans filing for unemployment benefits, the Nasdaq is on the cusp of hitting record highs — an astonishing feat that underscores how quickly Wall Street has rebounded.
The Fed’s emergency response, including slashing interest rates to zero and promising to buy unlimited amounts of bonds, was designed to make risky assets like stocks look more attractive. Investors have essentially been forced to gamble on equities — and Big Tech in particular is benefiting from that.
Large tech companies aren’t just surviving during the pandemic — many of them are thriving. The crisis has made Amazon, for instance, even more essential than it already was. Amazon shares have spiked 47% from their mid-March lows.
Facebook also swiftly recovered to record highs. The net worth of Mark Zuckerberg, the company’s co-founder and CEO, has climbed $30.1 billion since March 18, the IPS report found.
The report calculated billionaire wealth using data provided by the Forbes Global Billionaires List, a real-time assessment of net worth. March 18 is used as the starting date because that is the date tied to the 2020 Forbes Global Billionaire survey. It also roughly matches up with when US states and the federal government began imposing health restrictions.
Other tech power players have also amassed more wealth over the past three months. The net worth of Tesla boss Elon Musk, Google founders Sergey Brin and Larry Page and former Microsoft CEO Steve Ballmer have all climbed by $13 billion or more apiece since March 18, the report found.
Unemployment could soon hit nearly 20%
Meanwhile, the United States has been gripped by mass unemployment caused by social distancing requirements imposed to fight the pandemic.
Economists expect Friday’s jobs report to show the United States lost another 8 million jobs in May, lifting the pandemic tally to 28.5 million — three times the number of jobs lost during the Great Recession. The unemployment rate is expected to climb to nearly 20%, higher than it’s been since the Great Depression.
“Surging billionaire wealth juxtaposed with the suffering and plight of millions undermines the social solidarity required for us to recover together in the years ahead,” Chuck Collins, co-author of the IPI report, said in a statement.
Of course, millions of average Americans are also benefiting from the V-shaped recovery in the stock market. The rebound has lifted the value of investment portfolios, pension funds and retirement accounts. Even just betting on a vanilla fund that tracks the S&P 500 would have given investors a tidy return of nearly 40% since the March 23 lows.
About 52% of families owned stocks directly or indirectly through retirement plans like 401(k)s, according to 2016 stats from the Federal Reserve.
Yet a surging stock market helps the rich more than the rest of the country. That’s because the top 10% of households owned 84% of all stocks in 2016, according to NYU professor Edward Wolff.
These trends help explain the unrest that has gripped the United States. Although the initial catalyst was police brutality, the protests and riots are taking place in a nation divided across racial and economic lines. And those fault lines appear to be growing during the pandemic.
“You’ve got a combustible concoction of lost income and inequality,” said Joe Brusuelas, chief economist at RSM International.