U.S. household wealth smashed another record at the start of 2024 thanks to a surging stock market, according to a Federal Reserve report published Friday.
Household net worth rose about 2.9%, or $5.1 trillion, in the three-month period from January through March to a new high of $160.8 trillion, the Fed said in its quarterly snapshot of the balance sheets of households and businesses.
The increase was primarily driven by a $3.8 trillion increase in the value of equities held directly or indirectly through mutual funds, life insurance policies or retirement accounts. Since the start of the year, the benchmark S&P 500 is up about 13%, while the Dow Jones Industrial Average has climbed 3.2%. The tech-heavy Nasdaq Composite, meanwhile, has increased about 16% year to date.
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The value of real estate held by households climbed about $900 billion, also to a record, as high mortgage rates and limited supply pushed prices even higher.
At the same time, consumers and businesses ramped up their borrowing during the first quarter, even as they continued to face interest rates that are at their highest level in 23 years.
Business debt grew at a 4% annualized rate in the first quarter, buoyed by robust net issuance of debt securities. Mortgage debt expanded by 2.1%, and non-mortgage consumer credit grew by 1.8%. Federal government debt increased a 6.2% pace, while state and local government debt expanded by 3%.
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The findings come in the wake of a separate report published by the New York Federal Reserve, which showed that Americans racked up more debt in early 2024 — and a growing number of households fell behind on payments for several types of loans.
In the first three months of 2024, total household debt surged to a fresh record of $17.69 trillion, an increase of $184 billion, or 1.1% from the previous quarter. The increase mostly stemmed from a jump in mortgage balances, which rose $190 billion from the previous quarter to $12.44 trillion at the end of March.
The report also showed a notable increase in the number of borrowers who are struggling with credit card, student and auto loan payments.
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As of March, about 3.2% of outstanding debt was in some stage of delinquency, up from the 3.1% recorded the previous quarter but still down from the average 4.7% rate seen before the COVID-19 pandemic began. The transitions into delinquency, particularly serious delinquency in which a balance is more than 90 days overdue, rose across all debt types.
"In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups," said Joelle Scally, regional economic principal within the Household and Public Policy Research Division at the New York Fed. "An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households."
