American households have never been wealthier.
The latest quarterly numbers from the Federal Reserve show that the net worth of the U.S. household sector hit a new high of $160.8 trillion in the first quarter, after rising $5.1 trillion during the first three months of the year. Net worth was up 8.8% compared to the first quarter of 2023, handily outpacing 3.5% rise in inflation over that period. Happy days are here again, right?
Not so much. Americans remain quite cranky about the economy, as they have generally been since Covid hit, followed by the post-pandemic inflation.
This might sound paradoxical, but it makes sense because these aggregate statistics are a bit misleading. Basically they obscure the fact that a huge share of this wealth belongs to a relatively small group of the richest households.
Last year, for example, the vast majority (75%) of the increase in US household wealth — created by the strong stock market and a return to rising home prices — went to the richest 10% of U.S. households. (The Fed’s distributional numbers on household wealth aren’t yet out for the first quarter.)
Of course, this is kind of always how it works. Since the richest households own an overwhelming share of stock holdings, they benefit the most when the market moves up. They also tend to own homes, unlike less affluent Americans, meaning they benefit from rising real estate values. Of course, they also stand to lose the most if those prices fall.
So, don’t expect parades in the streets based on the fact that we’re hitting never before seen levels of wealth.
