According to the Fed’s consumer finance survey the mean net worth of an American household, adjusted for inflation, was $1.06 million in 2022. In comparison, in 2019 the mean net worth of an average household was $868,000, marking a 23% jump.

Mean net worth is calculated by adding up the net worths of all American households and then dividing by the number of households.

Yet when looking at the median—another measure of the average, which represents the midpoint in the ranking and is less likely to be skewed by exceptionally high or low numbers—the typical American household was worth significantly less: $192,900.

Although that figure is less exciting for aspirational workers, it still represents an impressive after-inflation gain of 37% over three years.

However, when analyzing the income of American families it becomes apparent that those in the middle of the scale are being left behind.

The top 10% of earners, who have a net worth on average of $6.63 million according to the Fed, saw their income increase by over 22%, while the middle-income percentiles—between the 20 and 59.9 mark—experienced just a 5% boost in their income between 2019 and 2022.

While the Fed notes there has been “some” increase in inequality between households, the data also shows the gap has only gotten wider between those at the extreme ends of the scale. On both gains in income and net worth, those on the lowest end of the spectrum—in the less than 20 percentile—saw far lower increases than those in the top 10%.

Take net worth, for example. Median calculations estimate those in the >20 percentile saw their wealth increase 24%, while those on the top end of the scale enjoyed a 39% gain. Mean calculations of net worth actually show a drop of 2% for the lowest end between 2019 and 2022, while the top has gains of 18%.

Booming housing market creates millionaires

The research highlights the importance of getting on the property ladder if you want to build wealth. 

Nearly two out of every three American families were homeowners last year, reflecting a slight increase from the previous three years—and as the housing market boomed during the pandemic, so did the net worth of property owners.

The average net worth of homeowners stood at $1.53 million in 2022, compared with just $155,000 for renters. Even in the U.K., over 41,000 homeowners became millionaires—a rise of 6% from the year prior —as house prices skyrocketed last year.

But while the surge in home prices has benefited those already on the ladder, it creates a financial setback for aspiring homeowners. Another Fed survey released in May, found that 65% of Americans who rent are doing so because they can’t afford a down payment to buy a home. 

Still, 3.5 million people lost millionaire status last year

Although the average household is getting richer, the actual number of millionaires is declining.

The number of adults with assets of more than $1 million fell from 62.9 million at the end of 2021 to 59.4 million at the end of 2022, according to the UBS’s annual wealth report—and it’s the sharpest fall since the 2008 financial crash.

Even in the U.S., where there are significantly more millionaires than anywhere else in the world, 1.8 million people lost their “millionaire status” last year. Now, the total number of millionaires in the U.S. sits at around 22.7 million. 

In the U.K., the number of millionaires fell by 440,000 to 2.6 million, the third largest fall behind Japan, which dropped from 3.2 million to 2.6 million. Meanwhile, the number of individuals globally with more than $50 million fell by 22,500 to 243,000.

Correction, Oct. 25, 2023: This article’s headline was updated after publication to reflect the income of the middle class, with clarifications on inequality and middle-class income added.