U.S. household wealth jumped to a record $ 136.9 trillion in late March, a Federal Reserve report showed Thursday, suggesting plenty of dry tinder for economic growth as the coronavirus pandemic recedes and the country reopens.
Rising stock markets drove the overall increase in wealth, adding $ 3.2 trillion to household assets in the first quarter. The rise in real estate values added about $ 1 trillion, according to the US central bank’s latest quarterly report on household, business and government financial accounts.
The overall wealth of US households increased by $ 5,000 billion from the fourth quarter.
Balances in cash, checking accounts and savings deposits rose from around $ 850 billion in the first quarter to a record high of $ 14.5 trillion, according to the report, bolstered by massive government assistance aimed at mitigating the economic fallout from the pandemic and bringing families together on the other side of the crisis.
The Fed report provides aggregate numbers and fails to highlight the big differences between high-income and poor families, and those with jobs and those without.
Nonetheless, it underscores the additional purchasing power American families have overall this quarter and beyond, as COVID-19 cases continue to decline, and newly vaccinated Americans venture out and states lift. their remaining restrictions from the pandemic era. Economists predict that GDP growth this year will be the fastest in decades.
The rebound in economic activity, coupled with bottlenecks for key materials like semiconductors and numerous reports of companies unable to fill jobs, are pushing up inflation, though officials of the Fed expect this to be temporary.
The higher bank account balances reflected the $ 600 checks sent to most Americans as part of a pandemic relief plan signed by former President Donald Trump in late December, as well as most of the checks for $ 1,400 that were part of President Joe Biden’s relief plan in March.
The combined aid from the two packages amounted to $ 2.8 trillion and included money for small businesses and local governments, as well as additional weekly aid of $ 300 for the unemployed, although any disbursements afterwards. March only appears in the Fed’s next quarterly report.
The report showed that overall household debt rose in the first quarter at an annualized rate of 6.5% compared to a 6.2% increase in the fourth quarter, as residential mortgages accelerated. Households held $ 11 trillion in home mortgages as of March 31.
Borrowing by non-financial corporations accelerated at an annualized rate of 4.4%, from 1.1% in the previous quarter, reflecting an increase in corporate bonds, the Fed said.
Government borrowing increased at an annualized rate of 6.5% compared to 10.9% in the previous quarter.
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