U.S. household wealth increase in Q3 smallest of pandemic era, Fed says
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[December 11, 2021] (Reuters)
- U.S. household wealth rose to a record
$144.7 trillion at the end of the third quarter, a report from the
Federal Reserve showed on Thursday, though the $2.4 trillion gain over
the period was the smallest since the rebound from the coronavirus
pandemic began.
Real estate values added around $1.4 trillion to overall wealth,
according to the U.S. central bank's latest quarterly report on
household, business and government financial accounts. The value of
equities held by households and nonprofits fell by $300 billion.
The slower growth in U.S. household wealth suggests the boost from an
unprecedented period of easy monetary policy and a fiscal firehose of
aid initiated by former President Donald Trump and extended under
President Joe Biden has begun to wane.
During the third quarter, fiscal supports including pandemic
unemployment benefits and mortgage forbearance expired, and a surge in
COVID-19 infections peaked and then receded.
The Fed's quarterly report reflects the reduction in new government aid,
with federal government debt dropping at an annualized rate of 1.3%, the
first decline in the pandemic era.
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Federal Reserve in Washington, U.S., November 22, 2021.
REUTERS/Kevin Lamarque/File Photo
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Still, the imprint of government aid is large: compared with the first quarter
of 2020, U.S. household wealth is up nearly 31%, a much bigger and quicker gain
than after the 2007-2009 recession.
The report does not reflect the breakdown of gains by income, but a large part
was driven by rising home values and the stock market, benefiting households
with such assets rather than those at the bottom of the income spectrum.
The amount held in household savings deposits rose to $10.7 trillion in the
third quarter from $10.6 trillion at the end of the second quarter. Balances in
checking accounts increased to $3.71 trillion from $3.67 trillion in the second
quarter, the report showed.
Household debt grew at an annualized rate of 6.2% in the third quarter, compared
to 7.8% in the second quarter.
Non-financial business debt accelerated to an annualized rate of 3.9%, from 1.8%
in the second quarter.
(Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Paul Simao)
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