Americans’ household wealth took a hit in the first quarter of 2022, it fell to $149.3T. Stock prices fell sharply off record highs after the Federal Reserve began talking of QT and raising rates to combat inflation. Global economy slackness from the Russian invasion of Ukraine and Chinese Covid lockdowns also impacted asset prices negatively. Still Household Net Worth was up $12.706 TN (9.3%) over one year and $37.830 TN (33.9%) over three years – in history’s greatest inflation of perceived wealth.
Household Assets contracted $260 billion during Q1 to $167.917 TN, though one-year growth was still 9.1% ($14.025 TN). With Household Liabilities increasing $284 billion to $18.638 TN, Household Net Worth declined $544 billion to $149, 279 TN.
Household Net Worth-to-GDP declined to 612% (from 624%). But this compares to 491% at cycle peak Q1 2007, and 445% during peak Q1 2000. Years of asset inflation have fueled a consumer spending boom. The downside of the cycle will see sinking asset prices and tightened Credit conditions significantly restrain household spending.
HIGHLIGHTS OF US HOUSEHOLD WEALTH REPORT (1Q22)
From the Federal Reserve’s financial accounts report, previously known as the flow of funds survey
The Q1 US household net worth fell to US$149.3 trillion.
Balance Sheet of Households and Nonprofit Organizations, 1952 – 2022
The solid job market has sustained Americans purchasing power, sustaining household spending which is the largest component of the U.S. economy despite rising inflation.
The S&P 500, Nasdaq and Dow Jones Industrial indices all hit record highs after the stock swoon in December. Property prices have also risen in this period. From there we have stock markets pullback sharply.
- Stock market values fell by $3.0 trillion in Q1.
- Real estate added about $1.7 trillion
- Household debt grew by 8.3% annualized in Q1
- Business debt rose by 8% annualized
- Federal government debt rose by 14.9% annualized
- State and local debt contracted by 3% annualized
Source: Federal Reserve
From The Traders Community News Desk