US Household Wealth Hits Record $119-T in This V-Shaped Recovery

US Household Wealth Hits Record $119-T in This V-Shaped Recovery

#household #wealth #recovery #virus #stocks #bonds #jobs

Americans’ household wealth rebounded last Quarter to a record high as the stock market quickly recovered from a medical emergency chaos-induced plunge in March. The gains flowed mainly to the most affluent households even as tens of millions of people endured job losses and shrunken incomes.

Monday, the Fed said that American households’ net worth jumped nearly 7% in Q-2 to $119-T. That figure had sunk to $111.3-T in Q-1, when the coronavirus induced instant recession hammered the economy and pushed stock prices South.

Since then, the S&P 500 stock index has regained its record high before consolidating this month.

  • NAS Comp +20.1% YTD
  • S&P 500 +1.6% YTD
  • DJIA -4.9% YTD
  • Russell 2000 -11.0% YTD

The full recovery of wealth even while the economy has regained only about 50% the jobs lost to the instant recession underscores what many economists see as America’s widening economic inequality.

Data shows that the highest-paying 33% of jobs have just about fully recovered from the chaos recession, while the lowest-paying 33% of jobs remain 16% below pre-virus chaos marks.

The wealth data highlights the inequalities in the recovery in the sense that high-income workers not only have jobs that for the most part have come back; they also have savings that have continued to grow.

The richest 10% of Americans owned more than 67% of the nation’s wealth, the Top 1% owned 31% according to Fed data through the end of March, the latest frame for which figures are available.

The small financial cushion for most households could force many consumers to cut back on spending in the coming months, now that government financial aid such as enhanced unemployment benefits has expired. Any significant cutback in spending would, in turn, weaken the economy, expect more virus aid/relief/stimulus prior to the November election.

Household wealth reflects the value of Americans’ homes, plus bank accounts, stocks, bonds and other assets minus mortgage debt, auto loans, credit card debt and other borrowing. The figures are not adjusted for inflation.

During the April-June Quarter, the value of households’ stock portfolios rose $5.7-T, the Fed said.

Home values grew $500-B and Americans sharply increased their savings last Quarter reflecting a cutback in spending by wealthier consumers cautious about the virus’s threat to the economy.

The amount of money in checking accounts jumped 33% to $1.8-T. Savings accounts rose 6.1% to $11.2-T.

The federal government’s financial assistance in the form of $1,200 checks and $600 in weekly unemployment benefits also allowed some lower-income households to save more. That government assistance has expired.

Have a healthy day, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.