NEW YORK - Americans experienced a record surge in net worth propelled by unprecedented government stimulus during the Covid-19 pandemic, laying the groundwork for economic resilience in 2023.
Inflation-adjusted median net worth jumped 37 per cent to US$192,900 ($264,600) from 2019 to 2022, according to the Federal Reserve’s Survey of Consumer Finances out on Wednesday.
That marked the largest three-year increase in data back to 1989, and it was more than double the next-largest one on record, the Fed said.
The data, paired with a tight job market, underscores the strong backdrop that has supported the economy this year.
Consumer spending has yet to buckle and Americans have much more excess savings than previously thought, simultaneously propping up growth and keeping inflation elevated.
The strength of Americans’ finances is also thwarting the Federal Reserve’s efforts to slow down the economy and tame price pressures.
Officials have signalled they may raise interest rates once more this year, which traders are increasingly betting on as data continue to surprise to the upside.
Americans accumulated more wealth in the period as home values skyrocketed and more people invested in the stock market. Credit-card balances also dropped and measures of financial fragility such as bankruptcy declined.
Median net worth rose for all age groups with the largest growth among families younger than 35 years old, who saw their median net worth more than double. But they remained the least wealthy age group, while Americans aged 65 to 74 had the largest coffers.
When looking at the average gains rather than medians, the net worth levels were much higher. Overall, the average family was worth more than US$1 million in 2022.
The data also showed that a record 20 per cent of families owned a privately held business last year. These households had higher income and wealth than those that did not, and those metrics increased with the number of employees in their business.
Since the figures are through 2022, they may not reflect how persistent inflation and high interest rates have increased the financial vulnerability of many families in recent months. Elevated borrowing costs likely harmed ratios that measure debt-to-income and a family’s ability to stay current on their obligations. BLOOMBERG
