Sat, 16 Oct 2021

New record as U.S. household wealth reaches $141.7 trillion

Robert Besser
29 Sep 2021, 01:39 GMT+10

WASHINGTON D.C.: A report from the Federal Reserve reports U.S. household wealth rose to a record $141.7 trillion by the end of June due to capital market gains and a real-estate boom caused by the COVID-19 pandemic.

Some $3.5 trillion was added to household assets by rising equity markets in the second quarter, with the S&P 500 witnessing a total return of just over 8.5 percent, after considering reinvested dividends.

According to the Fed's latest quarterly report on household, business and government financial accounts, rising real estate prices also added some $1.2 trillion.

The report also reported that in the first quarter, overall U.S. household wealth increased by $5.9 trillion, while in the second quarter, balances in checking accounts rose to $3.6 trillion, compared with $3.3 trillion in the first quarter, while the amount held in household savings deposits fell to $10.6 trillion in the second quarter, from $10.8 trillion in the first quarter.

Household wealth unexpectedly increased by 28 percent, or $31 trillion, since the first quarter of 2020, due to related monetary and fiscal policies, said officials.

But just as a surge in COVID-19 cases affected vulnerable sectors and stifled job growth, much of the assistance offered to households, including new unemployment benefits and mortgage forbearance, have been either stopped or will expire soon.

Therefore, household debt grew by an annualized rate of 7.9 percent in the second quarter, compared to 6.7 percent in the first, the report noted.

Government borrowing increased at an annualized rate of 9.6 percent, up from 9.0 percent in the previous quarter, while non-financial business borrowing rose at a slower annualized rate of 1.4 percent, compared to 4.3 percent in the first quarter.

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