The Rich-cession of 2022: Millionaire Numbers Have Dropped

August 16, 2023

The world witnessed a significant dip in millionaire numbers last year. Labeled as the "rich-cession," UBS’s annual global wealth report revealed that global wealth declined for the first time since 2008.

The Rich Take a Hit

The global downturn was felt most sharply in the U.S. which faced a striking $5.9 trillion loss, a notable deviation from its $15.9 trillion gain in 2021. These figures dwarf the losses experienced by other countries, including major economies like Japan, China, Canada, and Australia.

The reason for this decline is multifaceted. The UBS report points to the stock market's roller-coaster performance between 2021 and 2022. The fortunes of the wealthy were closely tied to these market fluctuations.

The number of millionaires dropped by 3.5 million in 2022, arriving at a total of 59.4 million. The U.S. represented a substantial portion of this decline with about 1.8 million people losing their millionaire status.

A Global Perspective

Diving deeper into the geographical distribution of these losses, North America and Europe stood out, primarily due to their large millionaire populations. North America boasts 42% of the global millionaires. Europe follows with 27%.

Despite the setbacks of 2022, UBS remains positive about the future, projecting the number of millionaires to soar to 86 million by 2027, a jump of 44% from 2022.

Entrepreneurial Takeaways

While the rich-cession might seem to be a setback for the world’s wealthiest, it provides valuable insights for entrepreneurs:

Diversify Investment Strategies: The tight link between wealth decline and stock market performance suggests that diversifying investments can help insulate assets from market downturns.

Focus on Broader Market Segments: With the global median wealth increasing, there's an expanding market in the middle-class segment. Catering to this segment could yield significant dividends.

Keep an Eye on Global Trends: The expected growth in middle-income countries suggests new, burgeoning markets. Entrepreneurs should be poised to tap into these emerging opportunities.

While 2022's rich-cession has taken a toll on global wealth, it also offers a lesson in resilience and adaptability. For entrepreneurs, understanding these shifts and adjusting strategies accordingly could pave the way for future success.

Sources:

Dan Nicholson is the author of “Rigging the Game: How to Achieve Financial Certainty, Navigate Risk and Make Money on Your Own Terms,” deemed a best-seller by USA Today and The Wall Street Journal. In addition to founding the award-winning accounting and financial consulting firm Nth Degree CPAs, Dan has created and run multiple small businesses, including Certainty U and the Certified Certainty Advisor program.

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