Richcession: where have all the millionaires gone?

The cost-of-living crisis has hit households across the world – and a new report shows that even the very rich have not gone unscathed.

For the first time since the 2008 financial crisis, global household wealth dropped in 2022, by $11.3 trillion, according to research by financial services firm UBS. The number of millionaires fell globally by 3.5 million year-on-year to 59.4 million in total.

“Get ready for the richcession,” warned The Wall Street Journal’s Justin Lahart at the start of this year. He predicted that if the US economy came close to a recession in 2023, “it might be the well-heeled who take a bigger hit than usual”.

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Indeed, the global wealth loss was concentrated in regions such as North America and Europe. The UK “saw its millionaire cohort fall from 2.99 million to 2.56 million”, reported The Times. The number in the US, Japan and Germany fell, but France “bucked the trend”. Nevertheless, the US is still home to the highest number of millionaires in the world.

Ultra-high-net-worth individuals, described by UBS as adults with assets over $50 million, “weren’t spared”, said Fortune. Global numbers dropped by 22,490, with the US accounting for 81% of the fall. This was described as “unusual” in the UBS Global Wealth Report. “Their waning numbers bucks a longstanding trend in which the number of people with over $50 million in assets quadrupled since the Great Financial Crisis,” explained Fortune. The drop was largely attributed to “unfavourable foreign exchange rates compared to the U.S. dollar”.

And “confirming that those hardest hit were at the top of the financial dogpile was the fact that wealth inequality also fell over the same time”, added Fortune, although the top 1% still own 44.5% of global wealth.

Separate research for Bloomberg showed that Elon Musk, the world’s richest man, lost $138 billion in 2022 – “the same year that he bought Twitter for $44 billion”, The Telegraph reported. Mark Zuckerberg, co-founder of Facebook, also took a hit to the tune of nearly $81 billion. Overall, the richest 500 people in the world lost a combined $1.4 trillion.

Now, more than halfway through 2023, economists are backing off from predictions of a recession in the US, but “a ‘richcession’ may better describe the current climate since the job losses to date have disproportionately affected white-collar workers”, said CNBC.

Major job cuts have been “concentrated in higher-paying industries like technology and finance”, The Associated Press reported. Big tech companies in Silicon Valley have “laid off more than 227,000 people since the start of the year”, the New York Post added, with “Wall Street giants” also cutting thousands of jobs.

Although there has been a drop-off in serious wealth in the past year, the UBS report found there were “four times as many dollar millionaires as there were at the turn of the century”, The Guardian added. And the report predicted that global wealth would rise by 38% over the next five years.

The number of ultra-high-net-worth individuals is also expected to rise by 53%, said Fortune, suggesting that last year’s fall “may be only a blip”.