Despite high inflation rates, Americans have run over to buy as many stocks as possible. According to Stocklytics.com, U.S stock ownership has rocketed to 41.6% in 2024.
The year was off to an incredible start, with an impressive jump of over $3.8 trillion(QoQ) in the value of stock market assets in the first quarter.
In the year 2000, U.S. households had 38.4% of their financial assets tied to the stock market during a period marked by a federal budget surplus, low unemployment, and consistently high GDP growth. At that time, the stock market strongly reflected the growing economy. However, by 2010, stock ownership among U.S. households and non-profits had dropped to only 26.3%, a 32% decline from 2000.
Ten years later, stock market ownership had slightly recovered, reaching over 30.5% of households and non-profits. Investors’ growing confidence and the expanding economy fueled this rise.
Now, in 2024, stock ownership in the US is over 40%, with roughly 62% of Americans owning stocks. Of the cumulative American stock owners, 87% were upper-income Americans, 65% were middle-income Americans, and 25% were lower-income Americans. This reveals an upsetting tendency to increase wealth inequality, as lower-income groups are much less likely to invest in the stock market.
Why the Rise in US Stock Ownership?
US stock ownership reflects outstanding stock market conditions, with the American market being ten times the size of its closest rival, Japan, which boosts investor confidence. Additionally, the US economy will possibly grow by over 2.1% this year, outpacing Japan’s 1% and the UK’s 0.7%.
Even so, investors are drawn to buy US stocks because of their outstanding track record of performance. In the last decade, U.S. stocks had an average return rate of 12.3%, outpacing returns on real estate investment trusts and investment-grade corporate bonds. Compared to European equities, the US stocks also had higher returns, with the European market only realizing 4.6% annualized returns in ten years.
