The stock market pushed US households to a record

The strong rally in the stock market pushed U.S. household wealth to a record high of more than $154 trillion in the second quarter, helped by rising real estate values, according to Federal Reserve data released Friday. The net worth of households increased 3.7% to $154.The Fed’s total was $28 trillion in the April-June period, up from $148.79 trillion at the end of the first quarter, the Fed said in a quarterly summary of household, corporate, and government balance sheets Federal, state, and local levels announced. 

 Data showed that households have fully recovered from wealth losses caused by a bear market in the stock market and falling property values ​​during much of last year, as the Fed launched an aggressive campaign to curb high and rapidly rising inflation interest rates. 

 standard and; The Poor’s 500 Total Return Index, which includes reinvested dividends, returned 8.7% in the second quarter, its largest gain since the final three months of 2021. The stock market rally added $2.6 trillion to household wealth, accounting for nearly half of the increase in total wealth during the quarter. The second major growth driver was real estate, which rose in value for the first time since the second quarter of 2022, contributing to a $2.5 trillion increase in net worth. 

 At the end of June, household wealth exceeded the previous record of $152.$49 trillion determined in the first quarter of 2022 from about $1.8 trillion or 1.2%. 

  HOUSEHOLD CASH  

 The data showed the size of households&039; Cash holdings – which include various bank deposits and money market funds – continued to decline, falling for the fifth straight quarter to $17.7 trillion. stocks that contributed most to the resilience of consumer spending at the end of June have fallen by $66 billion since the end of March and by more than $560 billion from a peak of nearly $18.3 trillion at the end of the first quarter of 2022 

 Household savings habits continue to shift away from banks, which have been slow to keep up with the Fed’s rate hikes, offering higher interest rates on checking and savings accounts and, until recently, certificates of deposit. Bank deposits fell by more than $200 billion to less than $14.2 trillion, while money market fund balances rose by $137 billion to a record above $3.5,000 billion.

Household, corporate, and government debt continued to rise in the second quarter, although the pace of growth varied significantly depending on the sector. Total non-financial debt rose at an annual rate of 6.3% – the fastest since the first quarter of 2021 – reaching $71.2 trillion, with households and businesses holding about $20 trillion and the government $31.3 trillion of US dollars.

 The main driver of the increase was a 12.7% annual increase in federal debt, the largest since the record increase in the second quarter of 2020 that fueled the first round of pandemic relief spending. The U.S. Treasury increased bond issuance at the end of the second quarter after the Biden administration and Congress reached an agreement to suspend the federal debt ceiling and avoid a national default.

 Meanwhile, corporate debt growth slowed significantly, reaching just 1.9% year-on-year in the second quarter, the slowest increase since the final three months of 2020. (Reporting by Dan Burns, Edited by Chizu Nomiyama and Frances Kerry)

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