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 tech-heavy 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, shows that the highest-paying one-third of jobs have almost fully recovered from the recession, while the lowest-paying one-third 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 co-director 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%.
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.
About 45% of the U.S. population doesn't own equities, according to a Gallup survey from June 2020, and about one-third of households don't own a home.
Americans also sharply increased their savings last quarter. The federal government's financial assistance in the form of $1,200 checks and $600 in weekly unemployment benefits probably allowed some lower-income households to save more. That government assistance has since expired.
The amount of money in checking accounts jumped 33% to $1.8 trillion. Savings accounts rose 6.1% to $11.2 trillion.
Federal Reserve Chairman Jerome Powell has repeatedly expressed concern about widespread inequality in the U.S. economy and last week said it is likely inhibiting growth.
Yet many analysts say the Fed's policies have inadvertently contributed to inequality by disproportionately benefiting stockholders. The central bank has cut its benchmark short-term interest rate to nearly zero and is buying about $80 billion in Treasuries a month. Both moves have kept rates on government bonds ultra-low, thereby encouraging investors to plow money into stocks and raising share prices.
The Fed's report Monday showed that business debt jumped 14% in the second quarter, after an even bigger rise of 18.4% in the first quarter.
The data the Fed issued Monday pointed to huge gaps in wealth along racial lines. White households owned nearly 85% of total wealth at the end of March. Black households owned just 4.4%, Hispanics 3.2%.
Information for this article was contributed by Reade Pickert and Olivia Rockeman of Bloomberg News.