Household wealth hits record even as economy struggles

WASHINGTON » Americans’ household wealth rebounded last quarter to a record high as the stock market quickly recovered from a pandemic-induced plunge in March. Yet the gains flowed mainly to the most affluent households even as tens of millions of people endured job losses and shrunken incomes.

The Federal Reserve said Monday that American households’ net worth jumped nearly 7% in the April-June quarter to $119 trillion. That figure had sunk to $111.3 trillion in the first quarter, when the coronavirus battered the economy and sent stock prices tumbling.

Since then, the S&P 500 stock index has regained its record high before losing some ground this month. It was up 2.8% for this year as of Friday. The techheavy Nasdaq has soared more than 20% this year.

The full recovery of wealth even while the economy has regained only about half the jobs lost to the pandemic recession underscores what many economists see as America’s widening economic inequality. Data compiled by Opportunity Insights, a research group, show that the highest-paying onethird of jobs have almost fully recovered from the recession, while the lowest-paying onethird of jobs remain 16% below pre-pandemic levels.

The wealth data “highlights the inequalities in the recovery in the sense that high-income workers not only have jobs that for the most part have come back; they also have savings that have continued to grow,” said John Friedman, an economist at Brown University who is codirector of Opportunity Insights.

The richest one-tenth of Americans owned more than two-thirds of the nation’s wealth, according to Fed data through the end of March, the latest period for which figures are available. The top 1% owned 31%.

The small financial cushion for most households could force many consumers to cut back on spending in the coming months, now that government financial aid such as enhanced unemployment benefits has expired. Any significant such cutback in spending would, in turn, weaken the economy.

Household wealth reflects the value of Americans’ homes, plus bank accounts, stocks, bonds and other assets minus mortgage debt, auto loans, credit card debt and other borrowing. (The figures are not adjusted for inflation.)

During the April-June quarter, the value of households’ stock portfolios rose $5.7 trillion, the Fed said. Home values grew $500 billion.

Americans also sharply increased their savings last quarter, likely reflecting a cutback in spending by wealthier consumers nervous about the virus’s threat to the economy. The federal government’s financial assistance in the form of $1,200 checks and $600 in weekly unemployment benefits also likely allowed some lower-income households to save more. That government assistance has since expired.