In the last quarter of 2023, the world's top 1% witnessed their wealth reach a record-breaking $44.6 trillion, largely driven by a year-end stock market rally that boosted their portfolios, according to new data from the Federal Reserve (Fed). This growth was also supported by real estate gains, although business investments somewhat offset these increases.

Defined by the Fed as those with assets exceeding $11 million, the net worth of this elite group rose by $2 trillion in the fourth quarter. Stock investments were the primary source of these gains. The value of corporate stocks and mutual fund shares held by the top 1% surged to $19.7 trillion from $17.65 trillion in the previous quarter. While their real estate values increased slightly, the value of their private businesses declined, nullifying most of their non-stock gains.

This quarterly profit marks the latest addition to an unprecedented wealth boom that began in 2020 with the pandemic market surge. Since then, the wealth of the top 1% has grown by almost $15 trillion or 49%. The American middle class has also experienced a significant "tide" of wealth growth, with the middle 50% to 90% of Americans seeing their assets rise by 50%.

Economists attribute the stock market rise to a boost in consumer spending through the "wealth effect." When consumers and investors see their stock values skyrocket, they feel more confident to spend and take on greater risks.

The latest Fed report also emphasizes the concentration of stock ownership in the U.S. The top 10% of Americans own 87% of individual stocks and mutual funds, with the top 1% holding half of all individually owned stocks.

Economists note that the stock market's rise disproportionately benefits the wealthy, mainly boosting high-level consumer markets and spending. Middle-class and lower-income Americans’ wealth depends more on wages and home values than stocks.

With the S&P 500 already up 10% this year, it is likely that the upper class' wealth has already surpassed the record by the end of 2023. Although inequality slightly decreased in 2021 and 2022, as wages rose and housing prices soared, the wealth gap has since reverted to pre-pandemic levels. At the end of the fourth quarter, the top 1% represented 30% of U.S. wealth, while the top 10% represented 67% of the total wealth.