The market continued its historic downward spiral this year as it took a sharp dip. As a result, America’s wealth took a turn for the worse as stocks dipped below billions of dollars.
The Federal Reserve Bank released data on Thursday that revealed a notable turnaround in the net worth of households and non-profit organizations in the first quarter of the year, comparing the wealth gains of mid-2020 with the drop from $0.5 trillion to $149.3 trillion.
The stock market loss this year reflects the decline in value of directly and indirectly held corporate equities, slashing $3 trillion and pushing their total values to $43.6 trillion.
The market had its worst quarter since 2020 at the height of the global pandemic, with the Dow and S&P 500 dropping 5%. The Nasdaq also took a dive, reaching levels not seen since during pandemic times at 9%.
The COVID-19 pandemic is one of many factors that have contributed to the recent downturn in America. Others include rising oil prices, inflation on goods and services as well interest rate hikes by the Federal Reserve, including Russia’s invasion into Ukraine earlier this year.
The Federal Reserve announced that despite the gravity of these crises, an increase in real estate values helped trigger the decline. The Fed also pointed out high rates on personal savings were partly responsible.
Households and non-profits held a total asset of $44.1 trillion in real estate previously.
The household net worth to disposable income ratio is still near its record high, and it continues to be above where we were prior to the pandemic.
The Federal Reserve revealed that household debt grew at an annual pace of 8.3%, a testament to the strong growth in home mortgages and consumer credit.
The growth in home prices is causing Americans to take on more debt, especially since mortgage debt increased by 8.6%. The increase came primarily from credit cards and auto loans while consumer credit also shot up over 8.7%.