Net Worth Surged for Typical Families During the Pandemic, Says Federal Reserve Survey

According to the Federal Reserve’s triennial Survey of Consumer Finances, the net worth of the typical American family experienced a significant increase during the pandemic era. This surge in net worth can be attributed to higher home and stock prices, as well as government stimulus measures. Net worth represents the value of household assets after accounting for liabilities, and after adjusting for inflation, the median net worth soared to $192,900, reflecting a 37% increase from 2019 to 2022. This growth percentage is the largest recorded since the Federal Reserve began conducting its modern survey in 1989, and it is more than double the previous largest increase of 18% seen between 2004 and 2007, just before the Great Recession.

The report states that the increase in net worth was observed across various types of families, indicating that it was a near-universal trend. Mark Zandi, the chief economist of Moody’s Analytics, stated, “Americans got a lot wealthier during the pandemic,” attributing this wealth accumulation to the Federal Reserve’s decision to lower interest rates to historic lows at the start of the pandemic. This move made borrowing more affordable for consumers. Additionally, expanded social safety net measures significantly reduced the likelihood of individuals taking on debt. The rapid recovery of the U.S. economy, fueled by government support and the rollout of vaccines, also contributed to the surge in asset prices such as stocks and homes.

However, it is important to note that not all families benefited equally from this increase in net worth. The report reveals that households in the lower-income bracket, typically in the bottom 20% by income, do not typically hold significant assets like homes and stocks. Hence, wealth disparities persisted, with families in the bottom 25% by wealth possessing a median net worth of only $3,500, while the top 10% had a median net worth of $3.8 million. This persistent wealth gap highlights the lack of progress for those with minimal or no net worth.

The pandemic also witnessed an unprecedented scale of federal relief funds being injected into households. Stimulus checks, enhanced unemployment benefits, and child tax credits provided much-needed support for families. Additionally, measures such as the pause on student loan payments and interest helped alleviate the burden of debt. As a result, the “transaction account” balances, including checking, savings, and money market accounts, experienced a significant increase of 30% to an average of $8,000 from 2019 to 2022, as per the Fed data. At the same time, the values of financial assets like homes and stocks also rose dramatically. For example, the median net value of a house increased by 45%, from $139,100 in 2019 to $201,000 in 2022. The S&P 500 stock index also grew approximately 20% from the end of 2019 through 2022. Additionally, retirement account balances, such as 401(k) or individual retirement accounts, grew by 15% to $86,900.

Furthermore, the report highlights that more individuals began investing during this period, with direct ownership of stocks increasing significantly from 15% to 21% among families from 2019 to 2022, marking the largest change on record. The survey also noted that the racial wealth gap narrowed over the three-year period, as non-white families experienced relatively greater increases in home, stock, and business ownership compared to white families. However, despite this progress, significant wealth disparities still exist, with the typical white family having approximately six times as much wealth as the typical Black family and five times as much as the typical Hispanic family.

While the survey reveals substantial wealth gains for many families, it is important to recognize that there are signs of ongoing financial struggles for some, despite the increase in net worth during the pandemic. The poverty rate rose to 12.4% in 2022, increasing by 4.6 percentage points from 2021 and 0.6 points from the pre-pandemic rate in 2019, as reported by the Census Bureau. This poverty rate calculation incorporates government benefits such as food stamps and housing subsidies into income measurements. The expanded social safety net that played a crucial role in supporting households during the pandemic era had largely diminished by 2022, coinciding with record-high inflation. Consequently, household wealth likely reached its peak in mid-2022, resulting in a subsequent decline. Ted Jenkin, a certified financial planner and CEO of oXYGen Financial, emphasized that the net worth for individuals in the lowest income groups might have decreased, primarily due to higher debt loads resulting from aggressive borrowing after the expiration of government support.

In summary, the Federal Reserve’s Survey of Consumer Finances illustrates a significant increase in net worth for the typical American family during the pandemic era. Higher home and stock prices, combined with government stimulus measures, contributed to this surge in assets. On the other hand, wealth disparities persisted, with families in the lower-income brackets making minimal progress. The pandemic-era relief measures and social safety net played a critical role in increasing households’ net worth, but signs of ongoing financial struggles and a subsequent decrease in net worth have emerged. Understanding these trends can help policymakers and financial institutions address existing wealth gaps while providing necessary support to those who continue to face financial challenges.