Economy (Mar 11, 2021 12:05PM ET)
© Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration
WASHINGTON (Reuters) – U.S. households ended 2020 with a record $130.2 trillion in wealth, the Federal Reserve said in a report on Thursday, as rock-bottom interest rates and a massive fiscal rescue stemmed the economic fallout from the coronavirus pandemic.
Rising equity markets added $4.9 trillion to household assets in the fourth quarter and rising real estate values added around $900 billion, the report showed.
Balances in cash, checking accounts, and savings deposits rose by a combined $642.7 billion in the fourth quarter to a record $14.1 trillion. Household wealth rose $12 trillion from the year-earlier period
The U.S. central bank’s latest report on household, business and government financial accounts covered the period from October through December. It does not provide a breakdown of higher-income families versus poor ones, and masks the very different experiences of those with jobs and those without.
But it does serve as a snapshot of the overall state of family finances as millions of out-of-work Americans exhausted their unemployment benefits, job growth slowed, and COVID-19 cases surged, and just before the effects of last year’s $892 billion pandemic relief package kicked in.
Money from that package, which included $600 checks to most Americans, additional unemployment benefits, and aid to small businesses, did not start flowing until the start of this year.
And households stand to receive a new round of aid starting as early as next week, when most Americans will get an additional $1,400 check as part of a $1.9 trillion aid package passed by Congress and expected to be signed by President Joe Biden this week.
Overall household debt rose in the fourth quarter at an annualized rate of 6.5% compared to a rise of 5.7% in the third quarter, as home mortgage borrowing increased, the report showed.
Total mortgage debt hit $10.9 trillion, the report showed.
Non-financial business debt rose at a 0.8% annualized rate, up from a 0.5% pace in the previous quarter.
Government borrowing rose at a 10.9% annualized rate versus 9.1% in the prior quarter.U.S. households ended 2020 with record $130.2 trillion in wealth, Fed says