US household net worth hits highest level ever

Increase follows record drop caused the economic fallout of the coronavirus pandemic

WASHINGTON—A resurgent stock market and fiscal stimulus propelled the net worth of U.S. households to the highest level ever in the second quarter, despite a record drop in the previous three months caused by an economic shock from the pandemic.

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The net worth of American households and nonprofit organizations jumped 6.8% in the second quarter from the first, to $118.96 trillion. That is about $380 billion more than at the end of 2019, before the coronavirus pandemic wiped out more than $7 trillion of household wealth.

The figures, published in a quarterly Federal Reserve report known as Flow of Funds, illustrate the coronavirus’s historic hit to the U.S. economy, followed by a swift start toward recovery.

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Economists say the U.S. economy and labor market are recovering more quickly than expected from the downturn sparked by the pandemic and related lockdowns earlier this year. Business and academic economists polled recently by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter, following a decline of 31.7% in the second quarter.

Household net worth consists of the difference between assets—such as bank accounts, stock investments and real estate—minus liabilities such as mortgage balances and consumer debt.

The component that was most severely affected by the pandemic was the value of corporate equities owned by households, which fell 25% in the first quarter from the end of 2019. But most of those losses were recouped in the second quarter, when the value of equities stood at $19.52 trillion—or just 8.3% below their year-end level.

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Household real estate and bank-account values have continued to rise, on the other hand.

Most of the increase in debt amid the pandemic has taken place on business and government balance sheets, the Fed report showed. While the nonfinancial debt of households rose just 0.5% in the second quarter from the first, business debt climbed 14% and federal-government debt surged 59%.

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