The wealth of American households has declined for the first time since the pandemic began, due to a $3 trillion stock-market wipeout
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- US household wealth fell $500 billion to $149.3 trillion in the first quarter of 2022.
- It was the first decline in US household net worth since the start of the pandemic.
- The value of stocks fell $3 trillion while real estate value increased $1.6 trillion.
The wealth of American households declined for the first time in two years due to a stock market slump that wiped out $3 trillion, according to the Federal Reserve.
US household wealth fell to $149.3 trillion in the first quarter of 2022, down from a record $149.8 trillion at the end of 2021, according to a Fed report released on Thursday. That's a $500 billion fall in net worth.
It marks the first decline in household wealth since the first quarter of 2020, when markets crashed as the COVID-19 pandemic took hold.
The Fed said the decline in wealth was driven by a "sizeable" hit to the tune of $3 trillion in the value of stocks on the balance sheets of households. This loss was partly offset by a $1.6 trillion increase in real-estate value and a high rate of personal savings, said the Fed.
Bank accounts of households rose in the first quarter of the year, with checkable deposits and currency gaining about $209 billion to $4.29 trillion, according to the Fed's data. Time and savings deposits rose about $59 billion to $11.28 trillion.
Overall, household balance sheets were still $39 trillion above pre-pandemic levels, the Fed data showed.
The wealth of US households could continue getting hit by the stock markets in the second quarter of 2022 as equities remain weak. The S&P 500 fell 5% in the first quarter of the year and is down 16% this year so far. The Nasdaq 100 fell 9% in the first quarter and is down 26% year-to-date.
The Fed has been compiling household net worth data since 1952. Net worth here refers to a household's total assets, minus any liabilities or debts. The Fed's report is released quarterly.
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