Discover How the Pandemic Era Boosted Typical Family’s Net Worth by 37%, According to the Fed

According to the Federal Reserve’s triennial Survey of Consumer Finances, the typical family’s net worth experienced a significant surge during the pandemic era. This increase was primarily driven by higher home and stock prices, as well as government stimulus measures. After adjusting for inflation, median net worth increased by 37% to reach $192,900, marking the largest percentage growth since the survey began in 1989.

The Fed reported that net worth growth was widespread across different types of families. Mark Zandi, chief economist of Moody’s Analytics, described the pandemic as a period of immense wealth accumulation for Americans. The Federal Reserve’s decision to lower interest rates at the start of the pandemic, along with an expanded social safety net, eased borrowing costs and reduced the need for debt. As the U.S. economy showed signs of rapid recovery, fueled by government support and vaccines, asset prices such as stocks and homes experienced significant growth.

However, it’s important to note that not all families benefited equally. The survey revealed that families in the bottom 20% by income do not typically hold assets like homes and stocks. Furthermore, wealth gaps remain substantial, with families in the bottom 25% by wealth having a median net worth of $3,500 compared to $3.8 million for the top 10%.

The pandemic triggered a significant increase in federal relief funds such as stimulus checks, enhanced unemployment benefits, and child tax credits. The government also implemented measures to alleviate debt burdens, such as a pause on student loan payments and interest. As a result, the typical family’s “transaction account” balances, including checking, savings, and money market accounts, grew by 30% to $8,000 from 2019 to 2022.

In addition to the expansion of relief funds, the values of financial assets like homes and stocks also saw significant growth. The median net value of a house increased by 45% to $201,000 in 2022, while the S&P 500 stock index grew by approximately 20% from the end of 2019 to 2022. Retirement accounts such as 401(k)s and individual retirement accounts also experienced a 15% increase in balances, reaching $86,900.

A notable trend was the increase in stock ownership, with the percentage of families directly owning stocks rising from 15% to 21% between 2019 and 2022, the largest change on record according to the Fed.

The survey also highlighted a narrowing of the racial wealth gap over the three-year period, as non-white families saw greater increases in home, stock, and business ownership compared to white families. However, significant gaps persist, with white families having approximately six times the wealth of Black families and five times that of Hispanic families. Furthermore, the Fed noted that Black and Hispanic families experienced stagnated wages after adjusting for inflation.

Despite the wealth gains experienced during the pandemic, there are indications that many families are still facing challenges. The poverty rate increased to 12.4% in 2022, a significant rise from both 2021 and the pre-pandemic rate in 2019. Additionally, the expanded social safety net put in place during the pandemic gradually diminished by 2022, coinciding with a period of high inflation. Household wealth is likely to have peaked in mid-2022, and there are concerns that net worth has declined for lower-income groups due to increased borrowing as government support waned.