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Who Was or Is The Richest Man in the U. S.?

By JLP | March 12, 2007

Bill Gates has a net worth of $82 billion. Based on that number, he would be the richest man in the U. S. ever. However, according to Fortune, the richest man ever was John D. Rockefeller. Although his net worth at his death was only $1.4 billion, at the time it represented 1/65 of the nation’s GDP. Bill Gates’ net worth-to-GDP ratio is only 1/152, placing him 5th on the all time list.

Doing some math, we can figure out that today’s GDP is around $12.46 trillion. To arrive at that number, I simply took the inverse of 1/152 (1 ÷ 152) and divided that number into $82 billion. Like this:

$82,000,000,000 ÷ (1 ÷ 152)

$82,000,000,000 ÷ 0.006578947

$12,464,000,000,000

According to Federal Reserve’s 2004 Survey (PDF), the average household had a net worth of $448,200 (an estimate I think seems too high). This means the average net worth represents 0.0000035960% of the nation’s GDP, while Bill Gates’ net worth represents .66%. NOTE: this is a very rough estimate.

Finally, to put Rockefeller’s net worth in perspective, if Bill Gates’ net worth represented 1/65 of today’s GDP, his net worth would be…

$191,753,846,153!

Now I feel really poor!

Topics: Net Worth Statement | 18 Comments »


18 Responses to “Who Was or Is The Richest Man in the U. S.?”

  1. LAMoneyGuy Says:
    March 12th, 2007 at 1:42 pm

    I agree that the $448k average American household net worth number is too high. In fact, that is the mean. The median is $93k, still higher than I would expect.

    The mean, of course, is more dramatically skewed by the very wealthy. Five households with net worths of $0, $1k, $20k, 38k, and $2,500,000 have a median net worth or $20k, and a mean net worth of $511,800.

    What the disparity in the real numbers tells me is that the rich are getting really rich. In 1995, the median was 27% of the mean. In 2004 it was 20%. The lower median is as a percentage of the mean, the more the top end is disconnected from the rest.

  2. HC Says:
    March 12th, 2007 at 1:48 pm

    Or, you could not do math and just look it up. Heh.

    http://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

    Current dollar GDP is $13.4 trillion.

    Of course, Forbes was probably working with different estimates at the time.

  3. J.D. @ Get Rich Slowly Says:
    March 12th, 2007 at 1:49 pm

    JLP, I stumbled on something similar last summer — a list of the 100 wealthiest Americans of all time. I think it used the same formula. You might find it interesting.

    A discussion of income disparity is interesting, but so difficult without getting political. The fact is there are many factors that affect who is rich and who is poor. Some are personal. Some are political. Some are just chance. I want to write about this at my site, but because I try to keep it politically neutral, I haven’t found a way to approach it.

  4. Miguel Says:
    March 12th, 2007 at 2:15 pm

    You’re right about the income disparity discussion. It’s difficult to have without feeling the urge to reach thru the keyboard and choke someone – hence the very personal and political nature of the topic.

  5. tinyhands Says:
    March 12th, 2007 at 2:24 pm

    Income and net worth disparity aside, this is an excellent TRICK question for an economics or accounting class, because GDP and net worth are not analogous concepts. This is like comparing a balance sheet to a consolidated statement of income. One is a measure over a defined period of time while the other is a snapshot at a particular instant.

    According to the CIA Factbook, the per capita GDP in the US was $43,500 or 0.0000003% of the estimated $13T GDP. If we estimate Bill Gate’s income at $1M last year, that’s only 0.0000077% of the GDP.

    Net worth, however, is a different animal.
    I have no idea how many people are in the “average” household, but let’s assume 2. That means there are approximately 150M households in America (approx population 300M), combined with the Federal Reserve figure above gives Americans a combined $67.23T net worth. Thus, the average household’s share is 1/150Mth, while Bill’s (and Melinda’s) share is 0.122% (approx 183,000 times average net worth).

  6. Rob Says:
    March 12th, 2007 at 3:10 pm

    I don’t think it’s political to point out that a lower median/mean ratio does not necessarily mean that “the rich are getting really rich” and “the more the top end is disconnected from the rest”. It could easily mean that a lot of people have gone over the median, but not enough to shift it as much as the mean.

    If in one example 99 people have $1000 and one person has $1 million, the median is $1000 and the mean is $10,990. Median/mean = 9.1%

    In another example, 51 people have $1000 and 49 people have $100,000, the median is still $1000 but the mean has shot to $49,500, or a median/mean of 2%.

  7. LAMoneyGuy Says:
    March 12th, 2007 at 4:10 pm

    Rob,
    your math is correct, but I don’t think it accurately describes reality. To be fair, my five household example doesn’t either. However, in a large sample set you will have a smoother distribution of results with some spikes and valleys here and there. My statement cannot be proven with math, because as you pointed out they are not mathematical certainties.

    However, look at the data. The net worth of those in the 90-100 percentile of income went from a median 436.9 and a mean of 1,338.0 in 1995 to a median of 924.1 and a mean of 2,534.4 in 2004. Meanwhile, the net worth of those in the less than 20th percentile of income went from a median 7.4 and a mean of 54.7 in 1995 to a median of 7.5 and a mean of 72.6 in 2004.

    Also, look at the mean net worth growth from 1995 to 2004 based on percentile of net worth. For

  8. LAMoneyGuy Says:
    March 12th, 2007 at 4:12 pm

    For

  9. LAMoneyGuy Says:
    March 12th, 2007 at 4:16 pm

    For under 25%, median went from 1.2 to 1.7 (+41.6%), mean went from -.2 to -1.4 (-600%). For 90-100%, median went from 836.7 to 1,430.1 (+70.9%) and mean went from 1,766.7 to 3,114.2 (+76.3). Looks to me like a case of the rich getting richer.

    Also, the “just over median” group that you are referring to. For the 50-75th percentile of net worth households, median went from 117.1 to 170.7 (+45.8), and mean went from 122.6 to 185.4 (+51.2%). This group grew their net worth by substantially more than the bottom end, but well short of the top end.

    I haven’t even suggested that the rich getting richer is bad, simply that it’s happening.

    (jlp, sorry for the multiple comments, I had a < in my comment)

  10. Rob Says:
    March 12th, 2007 at 5:13 pm

    No doubt the rich are getting richer, which makes complete sense since they have more disposable income to save, whereas the bottom 20% is probably living paycheck to paycheck. I was just pointing out that your median/mean ratio doesn’t necessarily mean that. Your elaboration is more convincing, though I still see a couple of flaws: One is that an increase of 76% over 10 years really isn’t that much and doesn’t strike me as particularly remarkable. Even if the bottom 20% is stagnant, it doesn’t strike me as the top 20% are pulling away at an inordinate rate. I would like to see what the differentials are over every 10 year period in the last century to see if it is really more extreme now.

    Another is that the people in the bottom 20% 10 years ago are in most cases not the same people that are in the bottom 20% today. This is the same misconception inherent in the argument that “minimum wage workers” have not gotten a raise in [X] number of years. It is highly unusual that people making minimum wage at one point in time are the same people that are making minimum wage many years later. The same is true for net worth, which almost as a rule takes time to acquire. Many of the people in the bottom 20% 10 years ago were just starting out or fairly young, and now, 10 years later, are much higher in the percentile rankings. I know it is true for me – I had negative net worth 10 years ago. So it is completely rational to expect that to some extent the lower tiers don’t grow as much as the upper tiers – you’re not taking the age/time factor into consideration.

    I would be interested to see the same numbers broken down by age group – for example, how is the net worth of people in the bottom 20% and top 20% changing just for people in the 40-45 age group.

  11. Bobby Says:
    March 12th, 2007 at 9:51 pm

    FYI…your post calculation is correct but shows $82 Million, not $82 Billion.

  12. JLP Says:
    March 12th, 2007 at 10:03 pm

    FYI…your post calculation is correct but shows $82 Million, not $82 Billion.

    LOL! I ain’t used to workin’ with such big numbers.

  13. Jay Says:
    March 13th, 2007 at 12:06 am

    How rich can the rich get and the poor get poor before the cards fall? Obviously, rich people’s money has to come from somewhere (the masses). What would it take in terms of wages of the lower/middle class to hurt that of the upper class? Where’s an economist when you need one? :)

    One thing that has been asserted is that wages have been stagnant (not sure if this is in nominal or real terms) while corporate profits have been rather good. I don’t think this article addressed this part of the argument did it?

  14. John Says:
    March 16th, 2007 at 1:01 am

    Another thing to take into consideration.. Bill Gates isn’t the richest person in the world, and probably never will be. What do I mean? Well, those ‘in the know’ realize that Forbes publishes the list of “official” richest people. In other words the ‘known’ rich people, the people who actually pay taxes.. the people who are in the public.

    The real richest people on the planet are far richer than Bill Gates.. and how do I know this? Well when you have friends who work in private equity firms in Switzerland who deal with people with net worths that would put the Forbes list to shames, you get to discover a lot of things that are not “public knowledge”, let’s put it that way.

    My conclusion? Bill Gates is the richest tax-paying person in the world ;-)
    Not the richest in the world in absolute. :-)

  15. evan andersen Says:
    March 16th, 2007 at 7:13 am

    Finally,

    Someone has done their math on real rates of income. It is amazing how people stretch bias on inflation. The media loves this because it will work for their numbers. JD was the wealthest to date if I am not mistaken. Good to see that it has not gone to Gates’ head though, he has helped a lot with the fight on AIDS.

    Evan Andersen Lydia Capital

  16. Money Articles For The Week Of March 16, 2007 » Silicon Valley Blog About Money Says:
    March 16th, 2007 at 9:05 am

    [...] All Financial Matters has Who Was or Is The Richest Man in the U. S.? There are two answers to this question. Find out at JLP’s site! [...]

  17. ROSE Says:
    February 3rd, 2008 at 7:42 pm

    If Bill Gates is the riches man in the U.S. with a net worth of 82 billion and that is only one person. My question is, what would happen if he and other multi-billioners got together and gave back to the people that made them that rich? What I am getting at is if the U.S population is only 301,139,947 and they gave 1 million to each person they wouldn’t even spend half of a billion dollars. That brings me to my next question, why are there so many people loosing their homes and living in poverty here in the U.S? It doesn’t sound fair to me.

  18. tony Says:
    April 8th, 2008 at 7:53 am

    sir/madam ; i am tony from poor family india , i dont have father my father was farmer in my village , 22 my age,i have my mother & one sister only, i dont khow how to maintain my family we dont have own house also ….. somebody help us, please i am pleading you name of jesus help us please ,,,shamju999@hotmail.com

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