US household net worth hits all-time high on surging stocks and stimulus help

  • Household net worth surged a record $7.6 trillion in the second quarter to its highest level ever, according to Federal Reserve data published Monday.
  • The gains were mostly fueled by the stock market's rapid bounce-back and relief spending included in March's CARES Act.
  • Equities alone added $5.7 trillion to households' net worth. Real estate added $458 billion in value after gaining in the first quarter as well.
  • New data also shows businesses and the government shouldering the majority of new nonfinancial debt through the pandemic. While household debt climbed by just $17 billion, the government took on roughly $2.9 trillion in debt over the quarter.
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The net worth of US households surged to a record high in the second quarter as the economy began to stabilize and recover from the coronavirus pandemic.

Americans' household net worth jumped to $119 trillion from $111 trillion last quarter, according to Federal Reserve data published Monday. The increase follows a record decline through the first quarter as the coronavirus first drove outsized layoffs and slammed Americans' investments. The latest reading is also roughly $380 billion higher than that seen at the end of 2019, marking a full recovery from the pandemic's impact.

The quarter's wealth jump was primarily driven by the rallying stock market and the $2.2 trillion CARES Act. Corporate equity gains accounted for more than $5.7 trillion of the leap. Stimulus in the March spending bill, including economic relief checks and expanded unemployment benefits, helped prop up consumer spending and keep small businesses afloat.

Debt securities increased by $67 billion after contracting nearly $500 billion in the first quarter. Real estate, the only major category to gain value in the first and second quarters, jumped by roughly $458 billion. In all, the second-quarter increase in net worth is the largest in data going back to 1952.

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The Fed's net worth metric tracks households' difference between assets and liabilities. Assets can range from investment vehicles to savings accounts, while liabilities include mortgage balances and credit card debt.

The new data also shows businesses and the government shouldering the majority of new nonfinancial debt through the pandemic. Federal debt soared to $22.5 trillion from $19.6 trillion last quarter. Business debt rose to $17.6 trillion from $17 trillion. Household debt jumped by just $17 billion to $16.1 trillion.

The Fed's report reflects the V-shaped rebound many economists had hoped for early in the nationwide lockdown. Certain components of the total economy also show a sharp recovery, including the housing market and retail sales data. Still, a slowed rate of improvement to US jobless claims suggests certain areas of the economy will take far longer to fully heal.

Read more: Morgan Stanley wealth management's head of market research told us a risk to longer-term assets that investors are most overlooking as the economy recovers — and recommends 3 portfolio shifts for sustained gains

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