Wealth Rankings Show US Households Far Ahead of Western Europe on Average

Average wealth per adult in Western Europe is less than half that of the United States, though Europe closes much of the gap on median wealth.

New wealth-per-adult rankings show a wide gap between the United States and Western Europe, Euronews reported. Average wealth per adult in Western Europe is less than half that of the United States, a difference driven in part by the strong performance of American financial assets and equity markets.

The picture changes on median wealth, the figure for the person in the middle of the distribution rather than the average raised by the very rich. There, European countries perform better and the United States drops significantly, because American wealth is concentrated more heavily at the top. The two measures together describe two different economic models.

The gap between the average and the median is the analytical point. A high average reflects the size of asset markets and the fortunes at the top, while a stronger median reflects broader distribution. For investors and policymakers, the contrast reveals where household balance sheets are most exposed to a fall in asset prices and where consumption rests on a broader base.

What this means

The wealth gap reflects how much American household net worth is tied to financial markets, which is a strength when asset prices rise and a vulnerability when they fall. US consumption, heavily supported by equity and housing gains concentrated among wealthier households, is more exposed to a market downturn than Europe's, where wealth sits lower but is more evenly spread. The channel is the wealth effect: a sharp drop in US asset prices would cut consumer spending faster than an equivalent move would in Europe.

What to watch

Whether US equity and housing markets hold their gains, since a correction would compress the average-wealth lead that rests on asset prices.
How median wealth trends in both regions, because that measure, not the average, indicates the resilience of everyday consumer demand.

Observations to monitor, not financial advice.

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Source: Euronews

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