The Federal Reserve this week released the Flow of Funds (Z.1) data for the second quarter of 2020. Among the many things contained within the report, the Fed revealed that U.S. household (and non-profit group) net worth jumped by $7.61 trillion in Q2. That was the largest gain on record and exceeded the 6.1 percent plunge seen in Q1, in turn meaning that despite all of the earlier economic disruptions caused by the coronavirus and related containment efforts, household net worth still managed to end last quarter at a new all-time high ($118.96 trillion).
In terms of annual growth rates, total net worth rose by 4.39 percent in Q2, below the average pre-COVID expansionary pace (6.11 percent) but still a marked improvement from the decade-low hit in the first quarter (-0.41 percent). Trillions of dollars in direct transfer payments from the government and a spike in consumers’ savings rates of course helped but the bulk of the heavy lifting was done by the V-shaped rebounds seen in both the stock market and the real estate market. Considering that home values continued to rise over the past few months and that even after September’s uptick in stock market volatility the S&P 500 is still comfortably above its June closing level, another record high in household net worth should be expected when the Q3 Z.1 update is released later this year.
Sources: FRBG, NAR, FRBSL