Skyrocketing Walton wealth

Walmart’s stock has been trading near record highs over the past few weeks, which got us thinking about the Waltons’ wealth. Sam Walton’s three living children—Alice, Jim, and Rob—own or control over half of the company’s shares. They, along with their sister-in-law Christy Walton and cousins Ann Walton Kroenke and Nancy Walton Laurie, regularly make appearances on the Forbes 400. Walmart is the source of much of their wealth—when Walmart’s stock price soars, so does the family’s wealth.

Click the image above to enlarge.
Walton family wealth for Walmart founders Sam and Bud Walton and their heirs, Helen, Alice, Jim, Rob, John, Christy, Ann, and Nancy. Figures compiled from multiple Forbes reports.

We noted earlier this year that in 2012 these six Waltons passed the $100 billion mark for the first time. Their wealth has increased dramatically since the 1980s and early nineties, as the chart above shows. Do you know anyone whose wealth is up forty-seven percent from five years ago?

Probably not. Reuters explains that according to new data recently released by the Federal Reserve, “in the three years through 2010 the median family saw its net worth fall by nearly 40 percent, wiping almost two decades of asset accumulation off of the books.” The recession was a difficult time for most American families. These six Waltons, however, saw their wealth go from $69.7 billion in 2007, to $89.5 billion in 2010, and all the way to $102.7 billion this year—far different from the average family’s experience.

During a time of misfortune for many American families, the Waltons’ fortune grew dramatically, and this points to Walmart’s role in our economy. It seems that there are many American consumers who avoid Walmart’s understaffed stores when their budgets allow it. Plus, Walmart’s business model of cutting costs by offering low wages and poor benefits for associates works best when the economy isn’t expanding with other employment opportunities.

Let’s look back to 2007 for an example. That year, the Waltons’ wealth was over $30 billion lower than it is today. Walmart stock, the source of much of their wealth, reached multiyear lows in 2007, but then it climbed back up as the economy turned sour. And the Waltons’ wealth went up with it. That fall, with the economy on the brink of recession, Walmart’s former CFO put it clearly when he told analysts, “Tough times are actually a good time for Wal-Mart.”

In a recent Barron’s article, Stephanie Pomboy of MacroMavens offers an explanation of how Walmart’s stock performance relates to the broader economy:

The stock’s performance is one of the most reliable recession signals out there. Wal-Mart started to outperform in October of 2000. Five months later, the 2001 recession began. In 2007, the stock spurted again. And by December the recession was underway. So it is disconcerting, to say the least, that Wal-Mart has been outperforming the broader market since late April.

With Walmart trading at over $70 a share and their family fortune soaring with it, the Waltons have nothing to worry about, but it seems the rest of America might.

What do you think?