The net worth of U.S. households by the end of 2020 wrote a record high, because the stock market, real estate and other asset prices rose sharply, softening the impact of the new pneumonia (Chinese communist virus) Epidemic hit the economy.
The Wall Street Journal reported that the Federal Reserve Board (Fed) announced on the 11th that U.S. household net worth increased by 5.6% to $130.2 trillion in the 4th quarter of last year compared to the 3rd quarter, and grew by 10% compared to a year ago. The report does not show the distribution of wealth by income level.
The U.S. Congress and the Fed offered unprecedented stimulus measures to drive solid growth in financial assets since the first quarter of 2020, especially in corporate equities and mutual funds. The U.S. S&P 500 rose 12% last quarter and 16% for the year.
Higher real estate prices have also boosted the net worth of U.S. households, with many Americans able to roll over their mortgages at lower interest rates and use the cash to pay off debt or repair their homes. The median sale price of a Home rose nearly 13% annually to about $310,000 in December last year.
The increase in net worth of U.S. households is adding to optimism about this year’s economic recovery outlook, as household spending accounts for more than two-thirds of U.S. gross domestic product (GDP).
The $1.9 trillion bailout passed by the U.S. is expected to raise the annual economic growth rate forecast to the highest in nearly 40 years; analysts on Wall Street recently visited the survey have been higher this year’s average economic growth rate, from 4.87% estimated in February, to 5.95%.
Despite the impact of the epidemic, household balance sheets have not been affected, mainly due to the federal government has provided trillions of dollars in relief, including direct cash handouts to the general household checks, and additional unemployment benefits.
Total liabilities of U.S. households increase by 4% to $16.64 trillion in 2020, compared with a 3.2% increase in 2019. The consumer credit burden, on the other hand, remains virtually unchanged as some households use bailout checks with unemployment benefits to repay their loans.
The report noted that corporate outstanding debt increased by 9.1% to $17.7 trillion last year, while federal government debt increased by 24% to $23.621 trillion.
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