U.S. Household Wealth Reaches Record High

(Reuters) – U.S. household wealth rose last quarter to $163.8 trillion, setting a new record. This growth was primarily due to increases in real estate values and a surge in the stock market, according to data from the Federal Reserve released on Thursday.

The net worth of households and non-profits increased from $161 trillion at the end of the first quarter, driven by a $1.8 trillion rise in real estate value and a $700 billion gain in equity holdings.

Conversely, household debt escalated at an annualized rate of 3.2%, the fastest growth since the third quarter of 2022. Meanwhile, cash reserves declined slightly, with bank balances, money market funds, and foreign currency holdings totaling $18.44 trillion at the end of June, down from a record $18.51 trillion at the end of March.

This financial overview comes just before the Federal Reserve is expected to lower borrowing costs for the first time since the pandemic-induced recession. This decision follows a period of cooling inflation and aims to prevent a downturn in the labor market from impacting the overall economy.

The stock market finished the second quarter near record highs, with the benchmark S&P 500 index achieving a total return of 4.3%, including reinvested dividends.

Additionally, business debt rose at an annualized 3.8% pace, slightly below the 4% rate recorded in the first quarter.