Is It True That the Net Worth of US Households is Almost at a Record High?

July 06, 2023

Our latest focus is on the question of whether US household net worth has reached a record high. The answer is a resounding yes. US household wealth has soared, rising by 2% in the first quarter to reach an astounding $148 trillion, primarily driven by homeownership. This surge hints at a resilient economy with potential for continued growth and recession avoidance, contrary to some media narratives. However, it's essential to understand that the term "average" can be deceptive, as returns on equity funds vary widely depending on factors like fund type and market conditions. The key takeaway is to stay invested and not be swayed by short-term fluctuations. Much of the net worth increase in the first quarter can be attributed to a robust stock market resurgence, with household equities surging by $2.4 trillion. Conversely, a slight dip in real estate values due to higher interest rates somewhat offset this gain. Household debt, at a 2.2% annual growth rate in the first quarter, is one of the smallest increases in a decade, a departure from the rapid expansion seen during the post-pandemic recovery. In conclusion, US households are enjoying a significant uptick in net worth, notably fueled by a resurgent stock market, while simultaneously keeping a lid on debt growth. Visit Arista Wealth Management on YouTube for more valuable videos, tools, tips, and resources to help you lead a life of significance.

Full Transcript:

Hello, welcome to Arista Advice! Question of the week is: "Paul, is it true that the net worth of US households is close to a record high?" The answer is yes, unbelievably high! Let's look at some numbers.

The US household wealth is much higher than it was before the pandemic. The net worth of US households have risen by 2% in the first three months of the year to $148 trillion. The biggest asset is their individual home that they own. This net worth of $148 trillion is close to a record high and suggesting that the economy might have enough fuel to keep growing or at least to avert and to sidestep a recession. There's a lot of positive news out there, but the media is just scaring people and worrying them when they don't need to be.

However, the term average can be a bit deceiving. While the average returns on equity funds over a long period may seem attractive, there is a wide range of returns depending on the type of fund and the market conditions. What's important is to just stay invested and not worry about short-term events. Most of the increases in net worth in the first quarter was tied to a rebound in the stock market. The value of equities held by households, jumped by $2.4 trillion. A drop in the value of real estate due to higher interest rates, meanwhile, shaved off a portion of the household wealth. Household debt did increase at a 2.2% annual rate in the first quarter to $19.2 trillion, marking one of the smallest increases in the past decade. Debt had grown as fast as 8% as the US emerged from the pandemic.

In conclusion, the US households boost a higher net worth and reduction in debt. Most of the increase in net worth was tied to a rebound in the stock market. The value of equities held by households jumped $2.4 trillion.

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