Americans witnessed a remarkable surge in their household wealth last year, driven by a stellar performance in the stock market. According to data from the Federal Reserve, the total net worth of US households reached a record high of $156.2 trillion in 2023, marking an 8% increase from the previous year.
The surge in household wealth was predominantly fueled by a $4.7 trillion rise in the value of corporate equity held by Americans. On the other hand, the value of real estate on household balance sheets experienced a slight decrease of $0.4 trillion.
The overall value of stocks owned by Americans also saw a significant increase, reaching $47.5 trillion by the end of 2023, up from $39.7 trillion in 2022. The fourth quarter alone witnessed a $4.8 trillion jump in household wealth, propelled by a year-end market rally as investors anticipated a shift in monetary policy by the Federal Reserve.
Despite the increase in wealth, the fourth quarter also saw a 2.4% rise in household debt, with consumer credit and mortgage debt experiencing respective upticks. The stock market’s upward trajectory has continued into 2024, supported by positive sentiment around artificial intelligence and expectations of potential interest rate cuts by the Fed.
Investors remain optimistic as US stocks hit new record highs, driven by Federal Reserve Chair Jerome Powell’s reaffirmation of the central bank’s intention to ease monetary policy in the coming year. The positive market sentiment bodes well for continued growth in household wealth and investments as the year progresses.
