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U.S. Household Net Worth Hits Record High in Q2: 5 Picks

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The net worth of American households reached a fresh all-time high in the second quarter of 2021 supported by a faster-than-expected recovery of the U.S. economy from the pandemic-led devastations. On Sep 23, Fed reported that household net worth surged $5.85 trillion or 4.3% in second-quarter 2021 from the first quarter to reach $141.7 trillion.

Year over year, the net worth of Americans jumped 19.6% as second-quarter 2020 was fully affected by the global outbreak of the deadly coronavirus. The value of equities increased nearly $3.5 trillion while the value of real estate held by households rose around $1.2 trillion.

The U.S. economy grew 6.5% in the second quarter buoyed by a robust economic recovery. In absolute term, U.S. GDP in second-quarter 2021 came in at $19.4 trillion, exceeding $19.2 trillion recorded in fourth-quarter 2019, the last quarter before the global outbreak of coronavirus.

A sharp reduction in new coronavirus cases, nationwide COVID-19 vaccination and the gradual removal of economic and other day-to-day restrictions have resulted in a faster-than-expected reopening of the U.S. economy.

Moreover, a massive $1.9 trillion fiscal stimulus injected by the Biden Administration in March and the continuation of easy monetary policies by the Fed, keeping the benchmark lending rate near zero and buying bonds of $120 billion per month helped in the U.S. economy's recovery and enhanced the household net worth.

The U.S. stock market ended the second quarter of 2021 on a high note. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallied 4.6%, 8.2% and 9.5%, respectively. Moreover, the small-cap specific Russell 2000 advanced 4.1% and the mid-cap centric S&P 400 gained 3.3%. All these reflect a broad-based rally in second-quarter 2021.

On the other hand, the housing market has remained robust primarily due to record-low mortgage rates. The Fed adopted an ultra-dovish monetary stance and reduced the benchmark interest rate to as low as 0-0.25% in March 2020. The low rate of market interest rate significantly reduced mortgage rates, enabling consumers to buy houses. The strong demand has strengthened the real estate........

© Entrepreneur

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