Stocks lift U.S. household wealth — but mainly for the rich

WASHINGTON — A rising stock market lifted U.S. household wealth to a record $106.9 trillion in the April-June quarter, the culmination of a decade of economic recovery but a gain that is concentrated largely among the most affluent.

The value of Americans’ stock and mutual fund portfolios rose $800 billion last quarter, while home values increased $600 billion, the Federal Reserve said Thursday. Total household wealth is now 2.1 percent higher than in the first quarter, when it was $104.7 trillion.

The Fed’s report came on a day when a wave of buying on Wall Street sent stocks surging and lifted both the Dow Jones Industrial Average and the Standard & Poor’s 500 stock index to all-time highs. The Dow has gained nearly 8 percent this year, the S&P nearly 10 percent.

Household net worth reflects the value of assets like homes, bank accounts and stocks minus debts like mortgages and credit cards. The data aren’t adjusted for inflation or population growth.

They also don’t reflect the experiences of most U.S. households. Stock market wealth has been flowing disproportionately — and increasingly — to the most affluent households. The richest one-tenth of Americans own about 84 percent of the value of stocks. That’s up from 81 percent just before the Great Recession began in late 2007.

That trend is concerning to some economists, who regard such sizable disparities in wealth as unhealthy for an economy. When lowerand middle-income people don’t share much in overall prosperity, many are forced to absorb more debt and take other financial risks.

In theory, greater household wealth can speed the economy by making consumers feel richer and more likely to spend. But most consumers are spending less of their wealth than they did before the recession began, economists have found.

The rising concentration of wealth among affluent and educated Americans is another factor why the nation’s increased net worth isn’t accelerating the pace of consumer spending. Richer households are less likely to spend their wealth gains than middle- or lower-income households are.

America’s richest 10 percent of households were nearly 120 times wealthier than the lower middle class in 2016, the most recent year for which figures are provided in a separate Fed report. That is up from 112 times in 2013. (The lower middle class was defined as those whose wealth placed them between the 25th and 50th percentiles of net worth.)