A billion millionaires in 2025? not likely

James Canton, in his book “extreme Futures”, has made a prediction that there would be a billion millionaires in 2025.

On page 8 this 16 page pdf, we see that there are projected to be 8 billion people in 2025. A billion millionaires means that the person at the 12.5th percentile would be a millionaire.

The United States is the richest country, and in 2000, the mean wealth was $144,000 per person. BUT the median wealth in 2000 is $55000. So the top 100 million adults in the United States had $55,000 per person in 2000. (200 million adults in the USA in 2000, so the top 50 percentile had 100 million.) Wealth meaning net worth, where net worth is the value of physical and financial assets less debts.

Woops. Did this post a little fast.
The world numbers were correct in terms of how the top 10% and 1% are doing. Thanks for the catch.

Median household net worth increased from $49,932 in 1998 to $55,000 in 2000.

Therefore, the 50 percentile american is far closer and a little behind the top 10% in the world at 60K.

How we feel about the wealth is separate from the statistical question of millionaires.

This graph shows the changes in net worth from 1989 to 2004 in the United States. The poorest 75% have been mostly stagnant in their growth of net worth. The top 25% have closed to doubled their net worth. Following a similar pattern foward to 2025 then the top 15-25% of the United States would be millionaires. This is constant dollars. If one used future dollars which could have devalued then the top 50-75% could be millionaires in future devalued dollars. I think using future probably devalued dollars is pointless.

This is pdf that examines wealth in the world

To be in the top 10% in wealth in the world (in 2000) required $61,000 in assets, and more than $500,000 was needed to belong to the richest 1%, a group which — with 37 million members worldwide.

Notice someone is in the middle in the USA is almost in the top 10% in the world. The 40th percentile American was in the top 10% in the world. The top 12.5 percentile would be somewhat poorer but very close.

Here is a distribution of where the wealthiest 10% were in the world in 2000.

Using currency exchange rates, global household wealth amounted to $125 trillion in the year 2000, equivalent to roughly three times the value of total global production (GDP) or to $20,500 per person.

So for the top 12.5% in the world to become millionaires then the non-US population of the world would have to have far better wealth accumulation than the people in the US who are in the 50th to 40th percentile. This is conceivable as there will be large numbers in China who will become affluent. However, I do not think it is possible to the degree needed to get to one billion millionares in 2025.

If the world was following the US wealth distribution changes and those changes matched the 1989-2004 period, then the US would still have 25% of all of the wealthy 10% and only 1/3 of those americans would be millionaires. So the top 3.3% of the world or about 264 million people in 2025. World GDP has growing at 5% per year, while the USA is growing at 2.7% per year. Assuming this trend continues then the average person in the non-USA portion would gain 40-50% on the person in the United States. We can be generous and say that instead of the 10% person having less than half of the US mean of $144,000 then they catch up. But the average person in the United States is not projected to be a millionaire. It is the top 25% in the USA. So only the top 5% of the world would qualify. This would be 400 million people in the world.

For the person at the 12.5th percentile to be a millionaire then the next 600 million people would have to make 4 to 6 times more. People would have to be accumulating wealth with 8-11% per year better than they have been. Those people who had $50,000 in net worth would have to increase their net worth by 17% per year.

The top 12.5% would probably have about 80% of the worlds net worth. The top 10% in the world have 71% of the wealth. The top 2% had 50%. So the top 12.5 to 2% would have about 30% of the worlds wealth. One billion millionaires would mean that the worlds net worth would have increased to over 3,000 trillion in order for the poorest of the top 12.5% to have over one million dollars in net worth. This would be a 24 times increase from wealth in the year 2000. This would be an average of about 20% per year growth in world wealth from 2008 onwards.

So I would optimistically be projecting 400-500 million millionaires in 2025 and a more conservative estimate would be 120 to 250 million millionaires in the equivalent of today US dollars . A billion millionaires in 2025 would not happen unless you are using future devalued dollar pesos, the global economy starts growing at 20-30% or more per year starting in 2015 or there is a flattening in wealth distribution for the top 15%.

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