U.S. household net worth surged to a fresh record in the second quarter as Americans enjoyed an ebullient stock market and the largest-ever increase in the value of their real estate holdings.
Household net worth increased by $5.8 trillion, or 4.3%, to $141.7 trillion in the second quarter, a Federal Reserve report out Thursday showed. The advance included a $3.5 trillion gain in the value of equities and a $1.2 trillion improvement in real estate held by households.
Stocks have surged to record highs, and low borrowing costs have supported a flurry of home buying -- and ultimately home price appreciation. The figures highlight how the the huge amount of support provided by the government and the Fed has bolstered Americans' wealth.
Equity shares as a percent of total household assets rose in the second quarter to almost 29.5%, up from 25.6% in 2019, the Fed's report showed.
But not everyone is benefiting from those wealth gains. A large share of Americans are not invested in the stock market, and for many renters, the sharp rise in housing prices pushed the reality of owning a home further out of reach.
Net private savings grew at an annualized pace of almost $2.9 trillion in the second quarter after a $4.8 trillion surge in the first quarter -- a product of federal stimulus efforts. Savings have been a key driver of consumer spending, including last quarter, where consumer outlays jumped at one of the fastest paces on record.
Business debt outstanding increased by $63.2 billion from the previous quarter, or at a 1.4% annualized rate, in the April to June period to a total of nearly $18 trillion.
Federal debt outstanding increased $578.8 billion, or an annualized 9.6%, to $24.7 trillion. Government debt has swelled during the pandemic, as policy makers stepped in to ease the economic impact of the health crisis on people and businesses with trillions of dollars of support.
Consumer credit outstanding, not including mortgage debt, rose by $91.2 billion in the second quarter.
U.S. consumer sentiment rose slightly early this month but remained close to a near-decade low, while buying conditions for household durable goods deteriorated to their worst since 1980 because of high prices, according to the University of Michigan's preliminary sentiment index released last week.
Buying conditions for homes and motor vehicles all fell to the lowest in decades. The report said the declines were due to complaints about high prices. Consumers expect inflation to rise 4.7% over the coming year, matching the highest since 2008.
While consumers are more downbeat about the buying climate, they're still spending. A separate report last week showed retail sales rose unexpectedly in August, with gains across most categories, suggesting steady demand. Because the data aren't adjusted for price changes, the increase could partly reflect higher prices.
The delta variant of the coronavirus has dampened consumer sentiment and led economists to downgrade their forecasts for third-quarter growth as economic activity slows. Concerns about rising prices have also led to a deterioration in confidence in recent months.
Information for this article was contributed by Olivia Rockeman of Bloomberg News (WPNS).