(Bloomberg) — Young Americans have grown wealth far more than older generations since the pandemic began, thanks in part to a boom in the stock market, according to research from the New York Federal Reserve Bank.
Since 2019, the total wealth of adults under 40 has increased by 80%, while the total wealth of adults ages 40 to 54 has increased by 10%, economists at the Federal Reserve Bank of New York wrote in a report. The total wealth of adults over 55 increased by 30%. Blog article.
Researchers found that the youngest generation, by far the poorest, received most of the coronavirus-era fiscal stimulus, leaving them with extra savings to invest in stocks.
Stock markets boomed during this period, but they were also risky assets and could quickly reverse wealth gains if the market fell.
Overall, the collective wealth of young people is still a fraction of what older people have accumulated over decades. Economists at the Federal Reserve Bank of New York wrote that as of 2019, individuals under the age of 40 held only 5.7% of total U.S. wealth, compared with 37% of the population.
This also helps explain the large percentage increase in wealth compared to older generations.
“The under-40 group has seen a much larger increase in its stock portfolio share than older age groups,” economists at the New York Fed wrote. “The increase in stock investment—the fastest-growing financial asset class during this period— —Enables young people to achieve higher growth in their financial assets and overall wealth.”
