Household welfare in the US raises concerns
2022.12.09 13:11
Household welfare in the US raises concerns
Budrigannews.com – According to a Federal Reserve report released on Friday, the decline in U.S. stock prices outpaced the rise in real estate values, resulting in a $400 billion decrease in household wealth in the third quarter.
According to the Fed’s quarterly snapshot of the national balance sheet, household net worth decreased from $143.7 trillion at the end of June to $143.3 trillion at the end of September. It was the third quarter in a row that household wealth decreased.
An index that tracks 95% of U.S. stock market capitalization lost almost $2 trillion during that time due to concerns about stubbornly high inflation and the Fed’s excessive interest rate increases to try to bring it down.
From June to September, the Federal Reserve of the United States increased interest rates from 1.50-1.75% to 3.0%-3.25 percent.
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The interest-rate-sensitive housing sector bears the brunt of the aggressive actions taken by the U.S. central bank to dampen demand across the economy, which has slowed the pace of home price growth.
The sum of balances in checking accounts, savings and time deposits, and money market funds, as measured by the report, remained virtually unchanged at nearly $18.4 trillion in the third quarter. Since its peak in the first quarter, that has decreased by approximately $134 billion.
Customer financial records and currency market adjusts both ticked higher yet were counterbalanced by a drop in reserve funds and time stores.
In order to assist in lowering inflation, the Fed is counting on consumers to reduce their spending. Household savings that were higher than usual thanks to government assistance during the worst of the COVID-19 pandemic have begun to decrease, but they are still higher than they were before the pandemic. American budgets have also been cushioned by continued robust job gains despite slowing economic growth.
The Fed data also showed that total nonfinancial debt increased at an annualized rate of 4.9 percent after rising at a rate of 6.5 percent in the second quarter. Family obligation development eased back to a 6.3% yearly rate from 7.4% in the April to June period, while business and national government obligation likewise rose at a more slow speed. In the third quarter, debt held by state and local governments decreased.
