The drop in the stock market caused the value of shares held by American families to drop by $3 trillion in the first quarter.
According to the US Financial Accounts report, released by the US Federal Reserve (Fed), the assets of households and non-profit organizations in this country fell for the first time in 7 quarters. This number decreased by $500 billion in the first quarter, to $149.300 billion. This is a notable drop, in the context of the previous strong increase in American wealth, thanks to soaring home prices and US stocks.
The first-quarter drop reflects a drop in the stock market earlier this year, with $3 trillion in equity evaporating from household wealth. The total value was only 46.3 trillion USD in the first quarter. This is one of the largest assets of American families.
The DJIA and S&P 500 indexes have fallen nearly 5% in the first three months. Meanwhile, the Nasdaq Composite lost nearly 9%. This is the market’s worst quarter since the beginning of 2020, when Covid-19 first appeared in the US.
However, the drop in the stock market was offset by $1.7 trillion in additional real estate and personal savings rates continued to rise, the Fed said. Households now hold $44.1 trillion in real estate.
The ratio of household wealth to disposable income is also near record levels and continues to be much higher than it was pre-pandemic.
Meanwhile, household debt also grew at a rate of 8.3% a year, to $18.3 trillion. Strong increases occurred in both home loans and credit cards.
Home loan increased by 8.6% due to continuous increase in house prices. Americans are also using credit cards more and taking out more car loans.
Ha Thu (according to CNN)