Household wealth tops $150 trillion for the first time despite surge in debt

A packet of US five-dollar bills was inspected at the Bureau of Engraving and Printing in Washington March 26, 2015.

Gary Cameron | Reuters

Americans got considerably richer as 2021 came to a close, thanks to a nice boost from their stock market holdings and an increase in real estate values, the Federal Reserve reported Thursday.

Household net worth in the fourth quarter eclipsed $ 150 trillion for the first time, rising at a healthy 8.2% pace from the previous quarter for the fastest growth period since the first quarter of 2020. The increase came thanks to a combined $ 4 trillion increase in holdings from corporate equities and housing.

The total level – $ 150.29 trillion, to be exact – represented a 14.4% increase from a year ago. The boost came with US economic growth running at its fastest pace since 1984 and the stock market enjoying another robust year.

The move came despite a rapid increase in debt at all levels.

Total nonfinancial debt came to $ 65.1 trillion, including $ 17.9 trillion at the household level, $ 18.5 trillion in the business world and $ 28.6 trillion from government. Each category saw substantial rises.

Household debt jumped at an 8% annual rate, owing to a 6.9% rise in consumer credit and an 8% jump in mortgages. Nonfinancial business debt increased at a 6.7% clip, while federal government debt leaped by 10.8% after declining 1.3% in the third quarter.

The first quarter numbers for 2022 are unlikely to be as flattering for net worth.

Gross domestic product is expected to gain little if anything in the first quarter, and the stock market has stumbled out of the gate, pressured by runaway inflation and a geopolitical and humanitarian crisis in Ukraine. Stocks are in correction mode and remain volatile, with interest rate increases ahead likely to slow growth further.

Figures released Thursday showed consumer prices up 7.9% from a year ago, while worker wages in inflation-adjusted terms contracted 2.6%.

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