US household wealth hits record $130 trillion despite pandemic

Combined household wealth in the U.S. hit a record $130.2 trillion in the last quarter of 2020 despite the devastating economic effects of the coronavirus, according to Federal Reserve data released Thursday.

Household wealth jumped 10.1 percent last year compared with 2019, driven in large part by surging stock and home prices after interest rates were lowered to combat the financial fallout of the pandemic.

The Fed data does not break down the distribution of wealth, meaning it could mask the effects of inequality. Wealthy households are far more likely to own stocks and real estate than households in other income brackets.

In the fourth quarter alone, stock values rose $4.9 trillion, while real estate shot up $900 billion. Those two assets accounted for more than 80 percent of the overall increase in wealth during the final three months of 2020.

Balances in cash, checking accounts and savings deposits rose $642.7 billion, according to calculation of the data from Reuters, reaching their own record of $14.1 trillion.

The Fed figures also showed a 6.5 percent annualized increase in household debt, as people refinance their mortgages and bought new homes.

While household wealth has hit a record high each year in the past decade, the gains during 2020 are significant given the effects of the coronavirus recession, which left millions of Americans unemployed. By contrast, it took five years after the Great Recession for overall household wealth to return to its pre-crisis level.

The fourth-quarter data from the Fed represent a snapshot before Congress approved a $900 billion COVID-19 relief plan in late December, which included $600 stimulus checks and a boost to unemployment benefits.

President Biden on Thursday signed the $1.9 trillion American Rescue Plan on Thursday. The measure includes $1,400 in direct payments for most Americans, as well as further extensions to unemployment benefits and increases in child and earned income tax credits.