Americans lost half a trillion dollars in wealth in early 2022

Americans’ wealth plummeted earlier this year as the stock market slumped.

The net worth of households and nonprofits dropped $0.5 trillion to $149.3 trillion in the first quarter, according to Federal Reserve Bank data released Thursday.

This is a remarkable turnaround from the robust gains in wealth that began in mid-2020, fueled by soaring house and stock prices.

The decline in the first quarter reflects the stock market slump earlier this year, which slashed $3 trillion from the value of corporate shares held directly and indirectly. The total value of these holdings was $46.3 trillion in the first quarter, making it one of the biggest assets of households.

The Dow Jones and S&P 500 are down nearly 5% in the first three months, while the Nasdaq is down nearly 9%. It was the worst quarterly performance for markets since the first quarter of 2020, when the Covid-19 pandemic crippled the US economy.

On the market this year is Russia’s invasion of Ukraine, rising oil prices, rising inflation, interest rate hikes by the Federal Reserve and ongoing concern over the Covid-19 pandemic.

But the decline in equities was partially offset by a $1.7 trillion rise in home values ​​and an ongoing high rate of personal savings, the Fed said. Families and nonprofits held $44.1 trillion in real estate assets.

The ratio of household net worth to disposable income has remained close to its record high and remains well above its pre-pandemic level in 2019.

Meanwhile, household debt grew at an annual rate of 8.3%, reflecting strong growth in home mortgages and consumer credit, the Fed said.

The continued rise in house prices has led to an 8.6% increase in mortgage debt.

Americans also borrowed more on their credit cards and took out more auto loans, pushing consumer credit to jump 8.7%.