The Most Important Number of the Week Is $142 Trillion
A huge gain in U.S. household net worth is stoking consumer spending, but could it also be holding the economy back?
The wealth effect is working — or is it working in reverse?
Photographer: Paul Yeung/BloombergIf it’s true that the No. 1 rule in financial markets is, “Don’t fight the Federal Reserve,” then a very close second is, “Don’t bet against the U.S. consumer.” This week provided more evidence that Americans are in as good a position as ever to underpin the economy for years to come — with one crazy caveat.
The Fed said on Thursday that household net worth reached another record in the second quarter, jumping by $5.8 trillion to $141.7 trillion, led by a $3.5 trillion gain in the value of equities and a $1.2 trillion rise in real estate. That brings the increase over the four quarters ended June 30 to $23.2 trillion. To put this into context, the all-time high for any one calendar year was $11.6 trillion in 2019.