The U.S. stock market plummeting earlier this year caused Americans' wealth to nosedive.
Photo Insert: The net worth of households and nonprofit organizations fell $0.5 trillion to $149.3 trillion in the first quarter.
According to Federal Reserve Bank data released Thursday (Friday, June 10, 2022, in Manila), the net worth of households and nonprofit organizations fell $0.5 trillion to $149.3 trillion in the first quarter, Tami Luhby reported for CNN Business.
This is a significant shift from the robust wealth gains that began in mid-2020, fueled by skyrocketing home and equity prices.
The first-quarter decline reflects the stock market crash earlier this year, which reduced the value of directly and indirectly held corporate equities by $3 trillion. In the first quarter, the total value of these holdings was $46.3 trillion, making it one of the largest assets of households.
The Dow and S&P 500 both fell nearly 5% in the first three months, while the Nasdaq fell nearly 9%. It was the market's worst quarterly performance since the first quarter of 2020, when the COVID-19 pandemic shook the US economy.
Russia's invasion of Ukraine, surging oil prices, soaring inflation, Federal Reserve interest rate hikes, and continued concern about the COVID-19 pandemic have all weighed on the market this year.
However, the decline in equities was offset in part by a $1.7 trillion increase in the value of real estate and a continued high rate of personal saving, according to the Fed. Real estate assets held by households and nonprofits totaled $44.1 trillion.
In 2019, the ratio of household net worth to disposable income remained near a record high and remained far above pre-pandemic levels.
Meanwhile, the Fed reported that household debt increased at an annual rate of 8.3 percent, reflecting strong growth in both home mortgages and consumer credit. Mortgage debt increased by 8.6 percent as home prices continued to rise. Americans also borrowed more on credit cards and took out more auto loans, resulting in an 8.7 percent increase in consumer credit.