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American Household Wealth Jumped

in the Pandemic
Pandemic stimulus, a strong job market and climbing stock and
home prices boosted net worth at a record pace, Federal Reserve
data showed.

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The Federal Reserve data showed that Americans made nearly across-the-board financial progress in the
three years including and around the pandemic. Hiroko Masuike/The New York Times

By Jeanna Smialek and Ben Casselman

Reporting from Washington

Oct. 18, 2023

American families saw the largest jump in their wealth on record

between 2019 and 2022, according to Federal Reserve data released
on Wednesday, as rising stock indexes, climbing home prices and
repeated rounds of government stimulus left people’s finances
healthier.

Median net worth climbed 37 percent over those three years after
adjusting for inflation, the Fed’s Survey of Consumer Finances
showed — the biggest jump in records stretching back to 1989. At
the same time, median family income increased 3 percent between
2018 and 2021 after subtracting out price increases.

While income gains were most pronounced for the affluent, the
data showed clearly that Americans made nearly across-the-board
financial progress in the three years that include the pandemic.
Savings rose. Credit card balances fell. Retirement accounts
swelled.

Other data, from both government and private-sector sources,

hinted at those gains. But the Fed report, which is released every
three years, is considered the gold standard in data about the
financial circumstances of households. It offers the most
comprehensive snapshot of everything from savings to stock
ownership across racial, wealth and age groups.

This is the first time the Fed report has been released since the
onset of the coronavirus, and it offers a sense of how families fared
during a tumultuous economic period. People lost jobs in mass
numbers in early 2020, and the government tried to soften the blow
with multiple relief packages.

More recently, the job market has been booming, with very low
unemployment and rapid wage growth that has helped to bolster
incomes. At the same time, rapid inflation has eroded some of the
gains by making everyday life more expensive.

Inflation F.A.Q.

What is inflation? Inflation is a loss of purchasing power over time, meaning

your dollar will not go as far tomorrow as it did today. It is typically expressed
as the annual change in prices for everyday goods and services such as food,
furniture, apparel, transportation and toys.

Without adjusting for inflation, median income would have risen 20

percent, for instance, based on the report released Wednesday.

The job market has been booming, and at the same time, rapid inflation has eroded some of the gains by
making everyday life more expensive. Hiroko Masuike/The New York Times

The financial progress, particularly for poorer families, is

especially remarkable when compared with the aftermath of the
last recession, which lasted from 2007 to 2009. It took years for
household wealth to rebound fully after that crisis, and for some
families it never did.

Income climbed across all groups between 2019 and 2022, though
gains were biggest toward the top — meaning that income
inequality widened.

That made for a big difference between median income — the

number at the midpoint among all households — and the average,
which tallies all earnings and divides them by the number of
households. Average income climbed 15 percent, one of the largest
three-year pops on record.

Wealth inequality was more complicated. Because the rich hold

such a large share of financial assets in America, wealth gaps tend
to grow in absolute terms when stocks, bonds and houses are
climbing in price. True to that, wealth climbed much more in dollar
terms for rich families.

But in the three years covered by the survey, growth in wealth was
actually the largest in percentage terms for poorer families. People
in the bottom quarter had a net worth of $3,500 in 2022, up from
$400 in 2019. Among families in the top 10 percent, median net
worth climbed to $3.79 million, up from $3.01 million three years
earlier.

Because of the way the data is measured, it is difficult to break out

just how much pandemic-related payments would have mattered to
the figures. To the extent that families saved one-time checks and
other help they received during the pandemic, those would have
been included in the measures of net worth.

Families were also still receiving some pandemic payments when

the income measures were collected in 2021, which means that
things like enhanced unemployment insurance probably factored
into the data.

Some Americans appear to have taken advantage of their

improved financial positions to invest in stocks for the first time: 21
percent of families owned stocks directly in 2022, up from 15
percent in 2019, the largest change on record. Many of those new
stock owners appear to have been relatively small investors, likely
reflecting at least in part Americans’ enthusiasm for “meme
stocks” like GameStop during the pandemic.

The Fed’s newly released figures show that significant gaps in

income and wealth persist across racial groups, although Black and
Hispanic families saw the largest percentage gains in net worth
during the pandemic period.

Black families’ median net worth climbed 60 percent, to $44,900.

That was a bigger jump than the 31 percent increase for white
families, which lifted their household wealth to $285,000. Hispanic
families saw a 47 percent increase in net worth.

At the same time, racial and ethnic minorities saw slower income
gains in the period through 2021. Black and Hispanic households
saw small declines in earnings after adjusting for inflation, while
white families saw a modest increase.

For the first time, the report included data on Asian families, who
had the highest median net worth of any racial or ethnic group.

While the data in the report is slightly dated, it underscores what a

strong position American families were in as they exited the
pandemic. Solid net worth and growing incomes have helped
people to continue spending into 2023, which has helped to keep
the economy growing at a solid pace even when the Fed has been
lifting interest rates to cool it down.

That resilience has stoked hope that the Fed might be able to pull
off a “soft landing,” one in which it slows the economy gently
without crushing consumers so much that it plunges America into
a recession.

Jeanna Smialek covers the Federal Reserve and the economy for The Times from
Washington. More about Jeanna Smialek

Ben Casselman writes about economics with a particular focus on stories involving data.
He has covered the economy for nearly 20 years, and his recent work has focused on
how trends in labor, politics, technology and demographics have shaped the way we live
and work. More about Ben Casselman

A version of this article appears in print on Oct. 19, 2023, Section B, Page 1 of the New York edition with the headline:
Americans Experience Record Gain In Wealth. Order Reprints | Today’s Paper | Subscribe

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