For the first time since the economic collapse of a decade ago, the wealth of the billionaires dropped.
Over the past decade, this group saw a steady appreciation of their holdings. The global monetary policy of easing favored this group more than any other. Low interest rates and cheap credit led to an increase in the prices of assets such as stocks and real estate. This is very favorable to the world's wealthiest.
2018 saw a downturn in the trend that was in place. The overall wealth of this class dropped 4.3% during that year. In contrast, the previous 5 years saw an increase of over 34%.
Chinese billionaires were a large reason for the drop. Trade tensions are obviously affecting them more than the rest of the world. In fact, while global billionaires saw their wealth drop, the ones in the United States were able to withstand the trend change and still register growth, albeit only slightly.
A great deal was made of income inequality. With the events of the last decade, it is not surprising to see the outrage towards the wealthy on the increase. In spite of the drop, billionaires are still excelling as their businesses outpace markets.
The election of Donald Trump was spurred by nationalistic ideals. Much of the focus with the inequality targets globalization, long believed to favor the few. With salaries either stagnant or decreasing, Trump's message of bringing jobs back which were lost to globalization struck a chord.
A challenge with his tenure is the fact that his policies are tilted in favor of this wealthy. His administration rolled back regulations in an effort to stimulate economic activity. Whether this did or not is secondary to the fact that it did help earnings. At the same time, the Congress passed, which Trump signed, a tax cut, this one aimed at corporations. Once again, the benefactors tend to be those at the upper end of the spectrum.
Since billionaires tend to have more exposure to markets than the average person, the fact that 2018 ended with a sharp pullback in markets means that the 2019 turnaround might, indeed, favor them again. It is logical that, if the markets hold up through year end, the billionaire class will once again see their numbers grow.
This could also be short lived if we do happen upon a recession in the next year or two. Many are predicting that when the economy does fully turn south, it will be a very painful situation.
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