Stocks push US household wealth to record high

A rally in the stock market helped push US household wealth past $154 trillion in the second quarter, according to Fed data.

The US Federal Reserve (Fed) on September 8 released its quarterly report on the assets of households, businesses, state and federal governments. Accordingly, the assets of households increased by 3.7% to $ 154.28 trillion in the second quarter. This figure exceeded the previous record set in the middle of last year by $ 1.8 trillion.

The data showed households recovered the wealth they lost in stocks and real estate last year, as the Fed raised interest rates to curb inflation.

The rise in the US stock market helped households gain $2.6 trillion in wealth, accounting for half of the overall increase in the second quarter.

Real estate is also a big driver. US home prices rose last quarter for the first time since the second quarter of 2022, adding $2.5 trillion to households’ wealth.

However, household cash holdings (including bank deposits and money in liquid investment funds) continued to decline, falling for the fifth consecutive quarter to $17.7 trillion.

Household, corporate and government debt also continued to rise in the second quarter. Non-financial debt (households, governments and non-financial businesses) rose 6.3% year-on-year to $71.2 trillion. This was the fastest pace since the first quarter of 2021. Household and corporate debt totaled about $20 trillion. Government debt was $31.3 trillion.

The US federal government’s debt has risen the most since 2020, when it implemented many policies to ease the impact of the pandemic. Last quarter, the US Treasury accelerated bond issuance after US lawmakers reached a deal to suspend the debt ceiling to prevent the government from defaulting.

Ha Thu (according to Reuters)

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