If you had money in the stock market last year, you probably made some great cash… and then the government sent you more! Add in rising real estate values and American wealth climbed to record levels.
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.
And things got better in the New Year. We received the last round of stimulus spending in January, and we’re about to get more.
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.
Of course, a lot of this depended on the government printing money to buy bonds and issuing debt to spend like crazy. Government borrowing rose at a 10.9% annualized rate versus 9.1% in the prior quarter.
Eventually we’ll have to deal with that, but for today, we can just bask in the glow of the wealth.