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A typical family’s net worth rose sharply during the pandemic, largely due to higher home and stock prices as well as government stimulus measures, the Federal Reserve reported Wednesday at its triennial meeting Consumer Finance Survey.
Net worth is a measure of household assets after accounting for liabilities. After accounting for inflation, median net worth jumped to $192,900, up 37% from 2019 to 2022, the Fed found.
This percentage growth was the largest since the Fed’s modern survey began in 1989. It was also more than double the second largest increase on record: Between 2004 and 2007, just before the Great Recession, real median net worth increased by 18 %.
The increase in net worth was “nearly universal across different types of families,” the Fed said said.
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“Americans have gotten a lot richer during the pandemic,” said Mark Zandi, chief economist at Moody’s Analytics.
That’s in large part because the Federal Reserve cut interest rates to rock-bottom levels early in the pandemic, which lowered borrowing costs for consumers, Zandi said. An expanded social safety net reduced the likelihood that people would have to take on debt. And as it became clear that the U.S. economy would recover quickly from the early pandemic shocks thanks to government support and vaccines, “prices for assets like stocks and houses skyrocketed,” Zandi said.
Of course, not everyone benefited equally: Assets like homes and stocks are generally not held by families in the bottom 20% of income, the Fed said said.
And wealth disparities are still wide: Families in the bottom 25% of wealth had a median net worth of $3,500 in 2022. The top 10% had $3.8 million.
“Those who have wealth in America are getting bigger, and those who don’t are not making much progress,” said certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta and a member of the Advisor Council from CNBC.
House and stock values rose significantly
The pandemic brought with it an unprecedented level of federal relief funding Stimulus checks and enhanced unemployment benefits and child tax credits – issued to support households. The government also took measures to reduce the debt burden, such as suspending payments and interest on student loans.
Balances in a typical family’s “transaction accounts” – such as checking, savings and money market accounts – rose 30% to $8,000 from 2019 to 2022, according to Fed data.
At the same time, the values of financial assets such as houses and stocks rose significantly.
For example, the median net value of a home rose from $139,100 in 2019 to $201,000 in 2022 — a 45% increase, according to the Fed. The S&P 500 The stock index grew by about 20% from the end of 2019 to 2022. Balances in a typical retirement account such as a 401(k) or individual retirement account rose 15% to $86,900, according to the Fed.
Not only did stock values rise, but more people began investing. Direct ownership of stocks also increased “significantly” between 2019 and 2022, from 15% to 21% of families, the largest change on record, the Fed said.
The racial wealth gap also narrowed during this three-year period, as home, stock and business ownership increased relatively more among nonwhite families than among white families, the Fed said said.
However, these gaps are still large: The typical white family had about six times as much wealth as the typical black family and five times as much as the typical Hispanic family, according to the Fed.
And on income, the Fed added that Black and Hispanic families’ wages would be on track after inflation stagnated in 2019-22.
There are also signs that many families are struggling despite the gains in wealth during the pandemic. The poverty rate jumped to 12.4% in 2022 – a 4.6 percentage point increase from 2021 and a 0.6 point increase from the pre-pandemic rate in 2019, the study said Statistics Office. (This poverty rate reflects the supplemental poverty measure, which includes government benefits such as food stamps and housing subsidies in income measurements.)
The pandemic-era expanded social safety net had largely collapsed by 2022, around the same time inflation hit a 40-year peak.
In fact, household wealth is likely to have peaked in mid-2022, Zandi said.
“If the Fed were to do another survey today, they would probably find that net worth is lower, particularly for people in the lowest income brackets, in part because their debt loads are now higher,” Zandi said. “They’ve been borrowing pretty aggressively since government support tapered off.”