U.S. household wealth set a new record in the second quarter of 2024, rising to $163.8 trillion on real estate value gains and a rise in the stock market.
The latest data from the Federal Reserve revealed that the increase in the net worth of households and non-profits, which stood at $161 trillion at the end of the first quarter, was mainly due to a $1.8 trillion increase in the value of real estate holdings and a $700 billion rise in the value of equity holdings.
Meanwhile, household debt rose 3.2 percent annually, the fastest pace since the third quarter of 2022. In addition, cash-on-hand saw a marginal decline, with bank balances, money market funds, and foreign currency holdings reaching $18.44 trillion at the end of June, down from a record $18.51 trillion at the end of March.
The report also revealed that business debt rose 3.8 percent annually, slightly less than the 4 percent rise during the first quarter.
The U.S. household wealth data comes ahead of the Fed’s policy meeting next week where the central bank will likely start cutting interest rates. As inflation cools and the labor market shows signs of weakness, policymakers are ready to ease monetary policy to avoid impacting the economy further.
Read: U.S. weekly jobless claims rise marginally, signaling labor market stability
Traders priced in a 13 percent chance of a 50-basis-point rate cut at the Fed’s next policy meeting and an 87 percent chance of a 25-basis-point rate reduction, according to CME Group’s FedWatch Tool. The Federal Reserve has maintained its benchmark overnight interest rate in the current 5.25-5.50 percent range for a year after raising it by 525 basis points in 2022 and 2023.
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