US households lost $1.3T during stock market rut this fall
U.S. household net worth plunged amid stock-market volatility
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U.S. household wealth plummeted in the third quarter by the most in a year as a result of deep stock losses, according to a Federal Reserve report released Thursday.
Household net worth fell about $1.3 trillion, or 0.9%, in the three-month period from July to September to $151 trillion.
The decline was largely due to a $1.7 trillion drop in the value of equity holdings. That was offset by a rise in the value of real estate held by households, which hit a record high last quarter.
The Fed data comes after a volatile year for the stock market.
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People walk outside the New York Stock Exchange in New York City. ((Photo by Spencer Platt/Getty Images) / Getty Images)
All three indexes tumbled in mid-2023 amid fears that the Federal Reserve would raise interest rates higher than previously expected – and hold them at peak levels for longer.
But they have quickly recouped those losses, with the S&P 500 rising nearly 11% since it hit bottom at the end of October.
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The Fed's report also indicated that household debt continued to climb in the third quarter, rising at a 2.5% annual rate amid "somewhat slower growth" in both mortgage debt and non-mortgage consumer credit.
Americans are increasingly turning to credit cards to pay for everyday necessities amid still-high inflation.
Credit and debit cards (Photographer: Andrew Harrer/Bloomberg via Getty Images / Getty Images)
Credit card debt topped $1 trillion earlier this year, while delinquencies surged to an 11-year high in August.
Although inflation has cooled considerably in recent months, it remains up 3.7% compared with the same time one year ago, according to the most recent U.S. Department of Labor data.
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High inflation has created severe financial pressures for most U.S. households, which are still paying more for everyday necessities like food, gasoline and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily affected by price fluctuations.