U.S. Household Net Worth Posts Smallest Gain of Covid Recovery

U.S. Household Net Worth Posts Smallest Gain of Covid Recovery
© Bloomberg. Shoppers walk through NorthPark Center mall in Dallas on May 1.

(Bloomberg) — Growth in U.S. household net worth cooled in the third quarter as wealth created by rising home values was eroded by a temporary pullback in the stock market.

Household net worth increased by almost $2.4 trillion, or 1.7%, after a $6.14 trillion jump in the second quarter, a Federal Reserve report showed Thursday. While the quarterly advance was the smallest of the pandemic recovery, net worth still climbed to a fresh record of nearly $145 trillion.

The third-quarter gain included a $1.4 trillion improvement in real estate held by households, while the value of equity holdings declined by nearly $320 billion.

While the rise of the delta variant curbed spending and briefly dented equity prices during the period, the U.S. economy continued to improve. Solid job growth, robust consumer demand and the biggest company profit margins since the 1950s have driven stocks to new records. Meantime, low borrowing costs continue to fuel demand for homes, pushing up prices.

Still, not everyone is benefiting from the surge in stock prices and the housing boom during much of the pandemic. Survey data indicate just a little more than half of Americans own stock. And for the roughly third of households who rent, costs are rapidly rising.

Elevated savings remain a key source of firepower for household spending, though it’s eased as federal government stimulus has waned. Net private savings grew at an annualized pace of $2.84 trillion in the third quarter, the slowest growth since the start of 2020. 

Stronger Wages

Nonetheless, wages and salaries grew an annualized $10.5 trillion as employers raised pay of many to attract workers.

Business debt outstanding increased at an annualized rate of $695 billion from the prior quarter, or at an 3.9% pace, in the July to September period to a total of nearly $18.2 trillion.

Federal debt outstanding fell at an annualized rate of 1.3% to $24.6 trillion. Government debt has surged over the past two years amid trillions of dollars in federal aid to workers, businesses and local governments during the pandemic.

Consumer credit outstanding not including mortgage debt climbed an annualized $227 billion in the third quarter.

©2021 Bloomberg L.P.

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