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Americans’ wealth hit a record high of $163.8 trillion in the second quarter, thanks to a surge in real estate and stock prices.
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Federal Reserve data showed a nearly 2% increase in net worth from the first quarter, with real estate seeing the biggest increase.
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A record high in Americans’ wealth could create a “wealth effect,” which could prolong the economy’s resilience.
New data from the Federal Reserve shows that Americans are richer than ever.
Americans had a cumulative net worth of $163.8 trillion at the end of the second quarter, according to the Fed’s latest Financial Accounts of the United States report released Thursday.
US wealth reached a record high in the past quarter, rising nearly 2% from $161 trillion in the first quarter, driven by continued price increases in the US real estate market.
The increase was driven by a $1.8 trillion surge in real estate values ​​and a $700 billion surge in stocks.
The stock market hit a record high in June, as did the S&P CoreLogic Case-Shiller US National Home Price Index.
In addition to the increase in net worth, household debt also rose nearly 1% from the first quarter to $20.2 trillion, while holdings of cash and cash securities fell slightly to $18.44 trillion.
Overall, the data paints a healthy financial picture for the American consumer, who has plenty of cash and significant exposure to assets that are rising in value.
That’s one reason the US economy has proven so resilient despite the Fed’s aggressive rate hikes over the past two years.
Economist David Rosenberg said in a report last month that July’s strong spending numbers were likely fueled by the “wealth effect,” which is the idea that when a consumer sees their wealth rise, they feel more willing to spend, and vice versa.
According to Rosenberg, the strong retail sales numbers in July “are most likely a product of the ‘affluence effect,’ which keeps the upmarket consumer coming.”
It’s not just rising wealth that’s giving the American consumer a boost, but also rising wages.
Data released earlier this week by the U.S. Census Bureau showed that the median U.S. household income rose 4% in 2023 to a record high of $80,610.
The sharp increase represented the biggest annual jump in inflation-adjusted income since 2019.
All in all, it appears the US consumer is doing just fine, based on the latest economic figures.
Read the original article on Business Insider
