Wednesday, June 29, 2022

American household wealth declines for first time in 2 years – Business Insider

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The stock market rout has hit the wealth of American households.
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  • US household wealth fell $500 billion to $149.3 trillion in the first quarter of 2022.
  • It was the first decline in US household net worth since the start of the pandemic.
  • The value of stocks fell $3 trillion while real estate value increased $1.6 trillion.

The wealth of American households declined for the first time in two years due to a stock market slump that wiped out $3 trillion, according to the Federal Reserve .

US household wealth fell to $149.3 trillion in the first quarter of 2022, down from a record $149.8 trillion at the end of 2021, according to a Fed report released on Thursday. That’s a $500 billion fall in net worth .

It marks the first decline in household wealth since the first quarter of 2020, when markets crashed as the COVID-19 pandemic took hold.

The Fed said the decline in wealth was driven by a “sizeable” hit to the tune of $3 trillion in the value of stocks on the balance sheets of households. This loss was partly offset by a $1.6 trillion increase in real-estate value and a high rate of personal savings, said the Fed.

Bank accounts of households rose in the first quarter of the year, with checkable deposits and currency gaining about $209 billion to $4.29 trillion, according to the Fed’s data. Time and savings deposits rose about $59 billion to $11.28 trillion.

Overall, household balance sheets were still $39 trillion above pre-pandemic levels, the Fed data showed.

The wealth of US households could continue getting hit by the stock markets in the second quarter of 2022 as equities remain weak. The S&P 500 fell 5% in the first quarter of the year and is down 16% this year so far. The Nasdaq 100 fell 9% in the first quarter and is down 26% year-to-date.

The Fed has been compiling household net worth data since 1952. Net worth here refers to a household’s total assets, minus liabilities and debts. The Fed’s report is released quarterly. 

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