American households net worth soared37%to a record since1989، home values jump during pandemic

US Federal Reserve Board announced today in a survey of Consumer Finances that American households net worth surged more than 37% from 2019 to 2022 to a historic pace since 1989، a reflection of the pandemic era's tremendous economic swings and the wealth generated from homeownership and financial assets that they experienced a record surge in net worth propelled by unprecedented government stimulus during the pandemic، laying the groundwork for economic resilience in 2023.

Americans households net worth ballooned at a record pace

US Federal Reserve Board stated in a survey of Consumer Finances that American households net worth ballooned at a record pace during the pandemic as the government doled out unprecedented aid، households hunkered down amid widespread lockdowns، and stock as well as home values soared، according to a Federal Reserve survey.

US Federal Reserve Board revealed that American households net worth surge has boosted most US households since 2020 and helped sustain economic growth as inflation-adjusted median net worth jumped 37% to bnearly $193 thousand from 2019 to 2022، to the largest three-year increase in data back to 1989، and it was more than double the next-largest one on record according to the Federal Reserve’s Survey of Consumer Finances.

US household net worth grew from 2020 through 2022 at the fastest pace

Washington Post reported that the net worth of the typical American households grew from 2020 through 2022 at the fastest pace in more than three decades، while relatively low interest rates at that time made it easier for households to pay their debts، according to the US Federal Reserve’s Survey of Consumer Finances.

US Federal Reserve Board revealed in the survey of Consumer Finances that American households net worth that wealth for the median household، the midpoint between the richest and poorest households، jumped 37% during the last three years.

The increase in the American households net worth reflected primarily a jump in home values

The increase in the American households net worth reflected primarily a jump in home values and higher stock prices and a rise in the proportion of Americans who own homes and stocks، according to the US Federal Reserve’s Survey of Consumer Finances.

The jump in wealth occurred even as the brief but brutal pandemic recession cost 20 million Americans their jobs in 2020، however، extensive government relief aid، totaling about $5 trillion، helped spur a rapid recovery that regained the lost jobs much faster than had been true after the 2008-2009 recession، the US Federal Reserve’s Survey of Consumer Finances indicated.

The additional spending of American households helped fuel the worst bout of inflation

The US Federal Reserve (the Fed or the American Central Bank) explained in its Survey of Consumer Finances that the additional spending of American households، though، is believed to have helped fuel the worst bout of inflation in four decades.

The broad-based wealth increase helps explain the surprising durability of the U.S. economy this year and the consumer spending that powers about two-thirds of it، although economists have been warning، for at least a year، of a forthcoming recession، yet the economy has kept chugging along، according to the US Federal Reserve’s Survey of Consumer Finances.

Economic growth topped a robust 4% last quarter

The US Federal Reserve (the Fed or the American Central Bank) affirmed that economic growth in the just-completed July-September quarter might have annual rate، boosted by strong consumer spending for physical goods as well as for services، a broad category that includes airline travel، entertainment، restaurant meals and other experiences.

The US Federal Reserve (the Fed or the American Central Bank) stated that government-provided stimulus payments in the aftermath of the pandemic also boosted households’ finances and the American households net worth.

US Federal Reserve conducts the Survey of Consumer Finances every 3 years

The Survey of Consumer Finances which the US Federal Reserve (the Fed or the American Central Bank) conducts every three years، confirmed that the median value of checking and savings accounts and other cash holdings surged 30%.

The US Federal Reserve (the Fed or the American Central Bank) said that، with borrowing rates historically low، American households dedicated just 13.4% of their incomes to paying off debt in 2022، the lowest such proportion since the Fed survey began in 1989.

Wealth inequality remained in place during the survey period

Even so، substantial wealth inequality remained in place during the survey period، reflecting decades of widening disparities between the richest households and everyone else as among the wealthiest 10% of households، median wealth reached nearly $3.8 million in 2022، according to the Fed’s survey.

Still، more Americans bought individual stocks after the pandemic، a likely reflection، in some way، of the meme stock craze that was fueled partly by stimulus checks as the proportion of families that directly owned stocks، as opposed through mutual funds، jumped from 15% to 21%، a record increase، the survey of the Fed found.

American households net worth rose more، on a percentage basis

The median value of individual stock holdings was $15 thousand، the Fed report said، while the average value of direct stock ownership was much higher، about $404 thousand، the Fed’s survey found، reflecting the holdings of richer families.

The US Federal Reserve (the Fed or the American Central Bank) wrote in its report that household net worth rose more، on a percentage basis، for Black and Hispanic households than for white ones، though measured in dollar terms the disparities remained wide.

The median net worth of Black households jumped 60%

The median net worth of Black households jumped 60% but remained comparatively low at $45 thousand but for Hispanics، the figure surged 47% to nearly $62 thousand، while among white households، median household net worth rose 31% to $285 thousand، according to the Fed’s survey.

The US Federal Reserve Board found in its survey that even as wealth inequality declined، income disparities worsened، but median incomes grew 3% compared with the previous survey، which covered 2017 through 2019، while average incomes، which are swollen by the earnings of the wealthiest one-tenth of households، jumped 15%.

The outsize gain among the richest American households was driven by profits on stocks and property holdings

The outsize gain among the richest households was driven by profits on stocks and property holdings as well as higher wages، yet the income data was also more complicated than usual in this report، Fed officials noted.

The Fed’s survey focused on incomes in 2021، when many American households were still grappling with job losses from the pandemic recession but it did not، for example، capture the effects of stimulus checks.

Wages have actually grown faster for lower-income workers since the pandemic

Other economic research has found that since the pandemic struck in 2020، wages have actually grown faster for lower-income workers than for wealthier ones and this reflects the fact that restaurants، hotels، warehouses and many other service businesses dramatically raised pay to try to attract desperately needed workers، according to the Fed’s survey.

Meanwhile، a March 2023 research paper by David Autor، an economist at MIT; Arindrajit Dube، an economist at the University of Massachusetts، Amherst; and Anne McGrew، a Ph.D. student at UMass، found that rising wages for the lowest-paid one-tenth of workers from 2019 to 2022 managed to reverse one-quarter of the increase in income inequality since 1980.