The US economy has been impacted negatively by the coronavirus pandemic. This has led to more than 500,000 Americans losing their millionaire status since the pandemic started.
The US has, in the past few years, experienced unprecedented economic growth. By the end of last year, the Dow Jones Index was at an all-time high and there was optimism the trend would continue in 2020. The growth of millionaires had also risen to 11 million thanks to the tax cuts and a bull market that was breaking all historical records.
Coronavirus pandemic impact on the economy
In 2020, the coronavirus happened and disrupted this growth. In the US, 54,880 people have already been diagnosed with the virus, with a further 782 succumbing to the virus. The pandemic has also led the Dow Jones Index to lose more than 30 percentage points from its record highs this year. Businesses are also shutting down in a bid to allow their employees to social distance and fight the virus.
All these factors have now contributed to the number of households in the US who, at the beginning of the year, had cumulative assets of more than a million, losing their millionaire status. This is according to research done by the Spectrum Group.
The rich losing money
The drop in Dow Jones Indices, equity, and mutual funds have disproportionately affected the wealthiest one percent of the US. This is because they are more likely to own these assets. Data showed by the end of 2019, the one percent owned more than 53 percent of the mutual funds and equities in the US.
Research also shows that the top 500 richest people in the world have cumulatively lost $1.3 trillion this year. Out of the 500, US citizen makes up about 180 people whose data showed they had lost $433 billion.
However, the most financially affected group by the coronavirus pandemic are the poor and the middle class. According to the Federal Reserve Bank of St. Louis President James Bullard, the unemployment rate in the US will top 30 percent. This will further shrink the middle-class income avenues and have unprecedented consequences to the US economy.
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