U.S. Household Net Worth Hits Highest Level Ever -- Update
By Paul Kiernan
WASHINGTON -- A resurgent stock market and fiscal stimulus
propelled the net worth of U.S. households to the highest level
ever in the second quarter, despite a record drop in the previous
three months caused by an economic shock from the pandemic.
The net worth of American households and nonprofit organizations
jumped 6.8% in the second quarter from the first, to $118.96
trillion. That is about $380 billion more than at the end of 2019,
before the coronavirus pandemic wiped out more than $7 trillion of
The figures, published in a quarterly Federal Reserve report
known as Flow of Funds, illustrate the coronavirus's historic hit
to the U.S. economy, followed by a swift start toward recovery.
Economists say the U.S. economy and labor market are recovering
more quickly than expected from the downturn sparked by the
pandemic and related lockdowns earlier this year. Business and
academic economists polled recently by The Wall Street Journal
expect gross domestic product to increase at an annualized rate of
23.9% in the third quarter, following a decline of 31.7% in the
Household net worth consists of the difference between assets --
such as bank accounts, stock investments and real estate -- minus
liabilities such as mortgage balances and consumer debt.
The component that was most severely affected by the pandemic
was the value of corporate equities owned by households, which fell
25% in the first quarter from the end of 2019. But most of those
losses were recouped in the second quarter, when the value of
equities stood at $19.52 trillion -- or just 8.3% below their
The S&P 500 fell more than 30% from mid-February to
late-March as the spread of Covid-19 caused investors to panic. By
mid-August, however, U.S. stocks had recovered those losses.
Household real estate and bank-account values have continued to
rise, on the other hand, with the latter likely bolstered by
stimulus checks and enhanced unemployment benefits during the
second quarter. The personal saving rate -- the amount of
households' after-tax income that isn't spent -- surged to a record
26% in the second quarter from 9.6% in the first.
"The fiscal stimulus that we've received so far has been really
important in shoring up household balance sheets, and it was
instrumental to the recovery in consumer spending that we've seen
in the third quarter," said Blerina Uruçi, a U.S. economist at
Most of the increase in debt amid the pandemic has occurred on
business and government balance sheets, the Fed report showed.
While the nonfinancial debt of households rose just 0.5% in the
second quarter from the first, business debt climbed 14% and
federal-government debt surged 59%.
Write to Paul Kiernan at firstname.lastname@example.org
(END) Dow Jones Newswires
September 21, 2020 14:42 ET (18:42 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.