Slow Growth in Millionaire Population

balloon Its official: the wealthy are in an economic slump. According to Chicago-based Spectrem Group, the number of millionaires in the U.S. grew a meager 2% in 2007. That compares with 8% growth in 2006, 11% in 2005 and 21% in 2004.

There are now 9.2 million households worth $1 million or more, not including the value of their primary residence, according to Spectrem. Even multi-millionaires are feeling the pinch. Spectrem says the population of people worth $5 million or more also grew 2% in 2007, down from 23% in 2006 and 26% in 2005.

“The substantial gains in the number of millionaire households we’ve seen since the end of the dot-com bust has all but ground to halt, says George H. Walper, Jr., President of Spectrem Group.

Given that financial markets and economic growth in 2008 has been far worse so far than 2007, I expect flat growth or a contraction in the millionaire population in 2008. Just how bad a contraction depends largely on financial markets, since theyre such a strong determinant of wealth creation these days.

Still, the wealthy tend to ride out recessions better than the broader population these days. In 2002, the number of millionaire still grew by 2% and their wealth grew more than 3%, according to Merrill Lynch and Cap Gemini. The next year, growth was even stronger.

So while 2008 may be the tough year for the wealthy, 2009 is likely to look brighter.