The US household wealth reportedly surged to a fresh record high of $163.8 trillion in the second quarter, largely buoyed by gains in both real estate prices and stock holdings.
Real estate, equity
- The household sector’s real estate value climbed about $1.75 trillion, the most in a year, while the value of equity holdings rose about $662 billion, Bloomberg reported Thursday, citing a Federal Reserve report.
- The household wealth report comes less than a week ahead of the Federal Reserve’s much-awaited meeting to reduce borrowing costs for the first time since the pandemic crisis period.
- Market operators are expecting the decision as inflation has cooled and in hopes of preventing a slowing labor market from worsening.
- The rise in the net worth of households and non-profits to $161 trillion at the end of the first quarter was fuelled by a $1.8 trillion gain in the value of real estate holdings and a $700 billion rise in the value of equity holdings, Reuters reported.
- Furthermore, household debts for the April-June period increased at an annualized rate of 3.2%, the fastest growth since the third quarter of 2022.
- Cash on hand dropped modestly, with bank balances, money market funds and foreign currency holdings ruling at $18.44 trillion by the end of June, down from a record $18.51 trillion at the end of March.
- The US personal consumption expenditures (PCE) price index rose 0.2% in July, up 2.5% from the same period a year ago, according to a report in August.
- The stock market reportedly ended at near-record levels in the second quarter, with the benchmark S&P 500 index offering a total return of 4.3% including reinvested dividends.
US economic growth
The US economy grew by 3% year-on-year in the second quarter, thanks to a jump in consumer spending and business investment, the Commerce Department’s Bureau of Economic Analysis said in August. The latest gross domestic product (GDP) growth rate was upward from an initial estimate of 2.8%.
The second quarter GDP growth reflected a sharp increase from the sluggish 1.4% growth recorded in the first quarter due to subdued consumer spending.
What to watch for
The next Federal Open Market Committee meeting will be held on September 17 and 18, 2024, which is expected to cut interest rates.
