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U.S. Household Wealth Reaches New Record, But Savings Continue to Fall
September 8, 2023
A rebounding stock market and climbing home prices helped push U.S. household net worth to a record high in the second quarter, according to new Federal Reserve data.
The nation’s collective household wealth climbed 3.7% in the months between April and June, bringing the total to $154.28 trillion, up from $148.79 at the end of the first quarter. The data shows that households have recouped the losses from last year’s deep bear market and weakened housing market. The market’s rally added $2.6 trillion to household net worth. Property values, which saw their first increase since Q2 2022, contributed $2.5 trillion to the gains.
Household wealth at the end of the quarter topped the previous record set in the first quarter of 2022 by 1.2% or about $1.8 trillion.
Though Americans are richer than ever, on paper at least, they are increasingly cash-poor. The size of households’ cash war chests, which include bank deposits and money market accounts, continues to dwindle, falling for a record-breaking fifth consecutive quarter.
The massive amount of excess savings that Americans amassed during the pandemic continues to be spent down as consumers struggle to keep pace with inflation. The stockpile was down by $66 billion at the end of June from the end of March and has fallen by more than $560 billion from its peak of $18.3 at the end of Q1 2022.
Debt levels also rose throughout the quarter, with the main driver being government debt, which increased at an annualized rate of 12.7% during the quarter, the largest increase since Q2 2020 when pandemic relief spending began.
A separate report from the Fed showed consumer credit card debt reaching a record high during the quarter, surpassing $1 trillion for the first time. Households spending down their cash savings and increasingly turning to debt may suggest weaker consumption in the remainder of the year.
