U.S. household wealth soared to a record $136.9 trillion at the end of March, a report from the Federal Reserve revealed on Thursday, bolstered by massive government aid aimed at blunting the economic fallout from the coronavirus pandemic.
Rising equity markets drove the overall increase in wealth, adding $3.2 trillion to household assets in the first quarter. Rising real estate values added around $1 trillion, according to the U.S. central bank’s latest quarterly report on household, business and government financial accounts.
Overall U.S. household wealth increased $5 trillion from the fourth quarter.
Balances in cash, checking accounts, and savings deposits swelled by about a combined $850 billion in the first quarter to a record $14.5 trillion, the report showed.
The household wealth snapshot suggests U.S. families have extra spending power for this quarter and beyond as COVID-19 cases continue to fall, and newly vaccinated Americans venture out and states lift their remaining pandemic-era restrictions.
The report said nothing, however, about the large differences between higher-income families versus poor ones, and those with jobs and those without.
Overall higher bank account balances reflected the $600 checks sent to most Americans under a pandemic aid package signed by former President Donald Trump in late December, as well as the bulk of the $1,400 checks that were part of President Joe Biden’s relief package in March.
The combined aid of the two packages totaled $2.8 trillion and included money for small businesses and local governments, as well as an extra $300 in weekly aid to the unemployed, though anything disbursed after March won’t show up until the Fed’s next quarterly report.
The report showed overall household debt rose in the first quarter at an annualized rate of 6.5% compared to a 6.2% rise in the fourth quarter, as home mortgage borrowing accelerated, the report showed.
Non-financial business borrowing accelerated to a 4.4% annualized rate, up from a 1.1% pace in the previous quarter.
Government borrowing rose at a 6.5% annualized rate versus 10.9% in the prior quarter.