Household Wealth Surges in Third Quarter
US Households Sitting on $144.7 Trillion in Wealth
Household wealth in the US reached $144.7 trillion in the third quarter, setting a new record. However, the $2.4 trillion uptick is the smallest uptick since COVID-19 hit the US.
Real estate added $1.4 trillion in overall household wealth, with the average price for existing homes soaring over the past 12 months. Meanwhile, the Federal Reserve reported the value of stocks held by US households and nonprofit organizations fell by $300 billion during the third quarter.
The slowing growth in US household wealth could mean the benefits from near-zero interest rates, pandemic bond-buying by the Fed, and multiple stimulus checks are coming to an end.
Stimulus Aids Drives Some of the Gains
During the third quarter, household savings balances increased to $10.7 trillion from $10.6 trillion in the quarter prior. Checking account balances rose to $3.71 trillion from $3.67 trillion. Debt among households declined to 6.2% in the third quarter from 7.8% in the second quarter.
Since the start of the pandemic, US households have added $35.5 trillion in wealth. Some of that was driven by stimulus checks, surging real estate prices, and fewer expenses as everyone sheltered in place.
Couple that wealth with improving unemployment and rising wages, and some economists think US consumers are in a good position to spend more in 2022. That could position the economy for more strength next year.
Government Aid Declines
The third quarter also saw a decline in the amount of aid given out by the federal government. Federal debt fell at an annualized rate of 1.3%, marking the first time it declined since the pandemic began. Still, the impact of the government’s efforts loomed large in the third quarter. Household wealth gained by double digits since last year—a much faster rate than following the Great Recession of 2007 through 2009.
The pandemic caused a lot of pain and suffering but it also made a lot of US households wealthier. With much of the government aid now over, those big savings balances may start to come down.
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