I’ve written numerous times about generational wealth on this blog. My biggest post was one comparing different generations using the Fed’s Distributional Financial Accounts back in September 2021. I’ve posted several updates to that post as new the quarterly data was released, but this post contains a major update. I’ll explain in great detail below about the updates, but first let me present the latest version of the chart (through 2023q3):
Regular readers will notice a few differences compared with past charts. The big one is that young people have a lot more wealth than it appeared in past versions of this chart! You’ll also notice that I have relabeled this line “Millennials & Gen Z (18+)” and shifted that line over to the left a few years to account for the fact that this isn’t just the wealth of Millennials, and therefore the median age of this group is lower than in my past charts. The two dollar figures I highlighted are at the median age of 30 for these age cohorts (unfortunately we don’t have data for Boomers at that age).
The Federal Reserve has released the latest update to their Distributional Financial Accounts data, which the data underlying several of my past posts on generational wealth. With that recent data, I have updated the chart of wealth for Baby Boomers, Generation X, and Millennials.
The data is shown on a log scale to better show growth rates and allow for easier visual comparisons. But if you are interested in the more precise numbers, in the most recent quarter (2023q2) Generation X has, on average about $620,000 in net wealth, which compares favorably with Baby Boomers at about the same age (in 2006) with about $539,000 in net wealth per person. That’s about 20 percent more.
Millennials have about $115,000 in net wealth on average, which also compares favorably with Baby Boomers, who had slightly more at about the same age (in 1990) with $121,000 in net wealth on average. Given the uncertainties of all the data that goes into this, I’d say those are roughly equal. Gen X had a bit more around the same age (in 2007) with $149,000, but that fell significantly the next two years during the Great Recession.
(For more detail on my approach to creating the chart, see the linked post above, but in short I’m using the Fed DFA data for wealth, Census Bureau data by single year of age for population, and the Personal Consumption Expenditures price index for inflation adjustments (I also have a chart with the CPI-U — it’s not much different). Wealth data is for the 2nd quarter in each year (to match 2023), except for 1989 since the 3rd quarter is the first available.)
Given how much wealth can fluctuate based on housing values (see above for Gen X from 2007-2009), it might be useful to look at the data with housing. Housing is also a weird kind of wealth — for the most part, you can’t access it without selling (other than certain home equity loans), and when you do sell, unless your home appreciated more than average, you just have to move to another home that also appreciated.
Here’s the chart excluding housing value and mortgage debt:
The chart… doesn’t change much. The values are all lower, of course, but the comparisons across generations look pretty similar. Gen X right now is 17 percent wealthier than Boomers at the same age. And if we look at all three generations around the median age of 35, they are pretty close: Gen X with $123,000 (but slipping over the next few years), Boomers with $99,000, and Millennials with $90,000.
I’ve covered the topic of generational wealth before, and here’s the latest data on how each generation was doing at roughly the same age. The data is updated through the 3rd quarter of 2022.
The main takeaways:
Millennials are roughly equal in wealth per capita to Baby Boomers and Gen X at the same age.
Gen X is currently much wealthier than Boomers were at the same age: about $100,000 per capita or 18% greater
Wealth has declined significantly in 2022, but the hasn’t affected Millennials very much since they have very little wealth in the stock market (real estate is by far their largest wealth category)
Last week I wrote about wealth growth during the pandemic, but my favorite way to look at wealth data is comparing different generations. Last September I wrote a post comparing Boomers, Gen Xers, and Millennials in wealth per capita at roughly the same age. At the time, Millennials were basically equal to Gen X at the same age, and we were a year short of having comparable data with Boomers.
What does it look like if we update the chart through the second quarter of this year?
I won’t explain all of the data in detail — for that see my post from last September. I’ll just note a few changes. We now have single-year population estimates for 2020 and 2021, so I’ve updated those to the most recent Census estimates for each cohort. Inflation adjustments are to June 2022, to match the end of the most recent quarter of data from the Fed DFA. We still have to use average wealth rather than median wealth for now, but the Fed SCF is currently in progress so at some point we’ll have 2022 median data (most recent currently is 2019, and there’s been a lot of wealth growth since then).
What do we notice in the chart? First, we now have one year of overlap between Boomers and Millennials. And it turns out… they are pretty much at the same level per capita! Millennials have also now fallen slightly behind Gen X at the same time, since they’ve had no wealth growth (in real, per capita terms) since the end of 2021 to the present.
But Millennials have fared much better in 2022 with the massive drop in wealth: about $6.6 trillion in total wealth in the US was lost (in nominal terms) from the first to the second quarter of 2022. None of that wealth loss was among Millennials, instead it was roughly evenly shared among the three older generations (Boomers hid hardest). This difference is largely because Millennials hold more assets in real estate (which went up) than in equities (which went way down). The other generations have much more exposure to the stock market at this point in their life.
You can clearly see that affect of the 2022 wealth decline if you look at the end of the line for Gen X. You can’t see the effect on Boomers, since I cut off the chart after the last Gen X comparable data, but they saw a big decline since 2021 as well: about 6% per capita, along with 7% for Gen X. Even so, Gen X is still about 18% wealthier on average than Boomers were at the same age.
Of course, even since the end of the second quarter of 2022, we’ve seen further declines in the stock market, with the S&P 500 down about 4%. And who knows what the next few months and quarters will bring. But as of right now, Millennials don’t seem to be doing much worse than their counterparts in other generations at the same age.
In the US wealth distribution, which group has seen the largest increase in wealth during the pandemic? A recent working paper by Blanchet, Saez, and Zucman attempts to answer that question with very up-to-date data, which they also regularly update at RealTimeInequality.org. As they say on TV, the answer may shock you: it’s the bottom 50%. At least if we are looking at the change in percentage terms, the bottom 50% are clearly the winners of the wealth race during the pandemic.
Average wealth of the bottom 50% increased by over 200 percent since January 2020, while for the entire distribution it was only 20 percent, with all the other groups somewhere between 15% and 20%. That result is jaw-dropping on its own. Of course, it needs some context.
Part of what’s going on here is that average wealth at the bottom was only about $4,000 pre-pandemic (inflation adjusted), while today it’s somewhere around $12,000. In percentage terms, that’s a huge increase. In dollar terms? Not so much. Contrast this with the Top 0.01%. In percentage terms, their growth was the lowest among these slices of the distribution: only 15.8%. But that amounts to an additional $64 million of wealth per adult in the Top 0.01%. Keeping percentage changes and level changes separate in your mind is always useful.
Still, I think it’s useful to drill down into the wealth gains of the bottom 50% to see where all this new wealth is coming from. In total, there was about $2 trillion of nominal wealth gains for the bottom 50% from the first quarter of 2020 to the first quarter of 2022. Where did it come from?
I have seen it many times. It comes from this Washington Post article, but it seems to go viral on Twitter about every 6 months or so.
The implication of the chart seems to confirm what many young people feel in their bones: Boomers had it much easier, and it’s getting harder and harder for later generations to catch up and build wealth. For many the graph… explains a lot, as one recent viral Tweet put it (in the weird world of social media, 5 short words and a recycled chart are all it takes for 20,000 retweets).
But wait. A few questions probably come to mind. For example, when Boomers were young they comprised a much larger share of the population. The original article makes an attempt to adjust for this, by calculating a few ratios towards the end of the article. However, there’s a much more straightforward way to adjust for this, which also nicely fits into a chart: put wealth in per capita terms!
If we do that, here’s the chart we get (also, of course, adjusted for inflation).
Data is for 1989-2021 from the Federal Reserve’s Distributional Financial Accounts, but only the first quarter is available right now for 2021. For 1989, it is the average of the third and fourth quarters. Population data comes from Census single-year of age estimates for various years. 2020 and 2021 population estimated using growth rate from 2010-2019.Continue reading →
How do young people fare when it comes to household wealth? The recently released Survey of Consumer Finances from the Federal Reserve provides some insights. One major takeaway: the much-maligned Millennials are doing pretty good! Ernie Tedeschi created this informative chart on Twitter:
Looking at household net worth at roughly the same age, Millennials today have roughly the same household wealth as Boomers did in the past. And both of these generations beat the generation between them, Gen X, as well as the “microgeneration” creatively labeled Oregon Trail.
And it’s something of a running joke on Twitter, but I must add: Yes! It’s adjusted for inflation!
Part of this may be driven by the increase in dual-income households. Certainly that matters. While wealth data by number of earners is harder to track down, income data is more readily available. What if we look at single-income households? Millennials are still in the lead! (Once again, the chart comes from Ernie Tedeschi.)
And before you ask: Yes! It’s adjusted for inflation!
None of this means that Millennials don’t face challenges, including financial ones. This data is current through 2019, so 2020 will almost certainly make these numbers look worse, for a time. But all things considered and anecdotes aside, the kids today seem to be as well or better than past generations.
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