The Global Millionaire Boom


The U.S. still leads the world in number of millionaire households, but maybe not for long—household wealth is growing fastest in China

Household wealth is hitting record heights, and not just in the U.S. There are more millionaire households on the planet than ever before, particularly in Europe and in China, where growth rates are highest.

The total number of world millionaire households—those with assets of $1 million or more—grew by 14% in 2006, to 9.6 million, representing the richest 0.7% of all households and owning $33.2 trillion, or about a third of the world's wealth, according to a recent study by the Boston Consulting Group, a global management consulting firm.

"It's sort of a sexy thing, looking at managing relationships on a household level," says Bruce Holley, a New York-based partner with BCG, of the study. This is the first global wealth report from BCG that estimates the number of millionaire households per country, as well as estimating total wealth. "This year's report, our seventh, examines the greatest source of organic growth within wealth management players: namely, their human assets," write Holley and his colleagues in the report's preface.

China's Rising—Fast

The U.S. had, by far, the highest number of millionaire households, with nearly 4.6 million, and the highest number of $100 million-plus households, with 2,300. The number of millionaire households increased by a steady 10%, while $100-million-plus households grew by 7%, joining the ranks of Microsoft (MSFT) Chairman Bill Gates and Berkshire Hathaway (BRKA) Chief Executive Warren Buffett.

Japan, Britain, Germany, and China round out the rest of the top five countries with the most millionaire households, in that order. The number of millionaire households increased the most last year in China (up 39%), Spain (up 32%), and Britain (up 30.5%).

In Europe, the number of millionaire households grew by 26.4% in 2006, the highest of any region in the study, helped by its strong currency against the weakening U.S. dollar. In North America, millionaire households grew by just 9% in 2006.

The United Arab Emirates and Switzerland led the ranking for highest density of millionaire households, with millionaire households accounting for 6.1% of all households in each country—almost nine times the global average.

Japan, Britain, Germany, and Italy have the most households in the $100 million-plus bracket, and in terms of growth, China (up 74%), Brazil (up 27%), and Russia (up 26%) saw the highest rates last year.

"China is a force to be reckoned with," says Holley, noting that the country's total assets under management have grown at an annualized rate of 23% over the past five years. China's newest billionaire residents will find themselves in the company of powerful businessmen like Suntech Power's (STP) Shi Zhengrong, who lives in the city of Wuxi.

"Globalization of Inequality"

But some see a darker side to all this new wealth. "What these number disguise is the globalization of inequality everywhere in the world," says Charles Derber, professor of sociology at Boston College and author of Corporation Nation. "This is the phenomenon of the rich getting richer. And it's not a phenomenon to be happy about—that's my reaction."

According to new Internal Revenue Service data announced last week, income inequality in the U.S. is at its worst since the 1920s (before the Great Depression). The top percentile of wealthy Americans earned 21.2% of all income in 2005, up from 19% in 2004, while the bottom 50% of wage earners earned 12.8% that year, down from 13.4% a year earlier.

As of 2006, the U.S. held about 40% of the world's wealth and 50% of its millionaire households, according to the Boston Consulting Group. Now in China and India (which ranks 15th in BCG's list of countries with $100 million-plus households but, interestingly, does not appear in the top 15 nations for millionaire households), it's clear a substantial upper class is emerging. But rural poverty numbers are also on the rise, according to Derber.

Whether you're for it or not, "this is the name of the game in any part of the world," he says. "It's the Gilding Age of the globe."

Check out the slide show to see the 15 countries with the most millionaire households.

Roney is Real Estate writer for BusinessWeek.com.

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