According to federal figures, Americans household wealth reached a record $154.3 trillion. During the second quarter of this year, driven by a booming stock market and surging property prices.
Currently, consumer wealth has fully recovered from the recent decline in stock prices and real estate holdings caused by inflation.
According to data issued by the Federal Reserve on Friday, net wealth for households nonprofit organizations climbed by $5.5 trillion. Or 4%, between the end of March and the end of June. This comes after a $3 trillion gain in the year’s first three months. Inflation correction is not applie to the data.
The value of American stock market investments surged by $2.6 trillion during the quarter. Which was primarily responsible for this increase in wealth. The value of real estate holdings, including homes, rose by $2.5 trillion.
Now that household wealth has surpassed the previous high of $152 trillion set in early 2022 by roughly $2 trillion. Households should have a buffer to withstand upcoming economic storms and a potential increase in unemployment.
The Fed raised interest rates at their fastest rate in four decades beginning in March 2022 in response to rising inflation. The financial markets were shaken by those rate increases, which also decrease the value of stock holdings, cool the housing market, and increase the risk of a recession.
According to researchers at Moody’s Analytics, wealth hasn’t moved much in the past year despite the recent increase, which limits its impact on spending. Additionally, the instability of wealth since the pandemic’s start will serve as a reminder to households of the transience of any gains.
The US economy and the stock market have both recovered. Goldman Sachs has reduced its prediction of the likelihood of a US recession within the next 12 months from 35% to just 15%. A gentle landing, where inflation is controll but a recession is averte, is increasingly anticipate.