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US Household Wealth Hits All-Time High As “Top 1%” Have Never Been Richer While Poor Drown In Debt

The Fed’s latest Flow of Funds report released at noon today showed the latest snapshot of the US “household” sector as of Sept 30 2020. What it showed is that one quarter after the biggest surge in household net worth on record when US household net worth jumped by $7.6 trillion to $119.0 trillion (which followed the record drop in net worth in Q1 when $8 trillion was wiped out), in the 3rd quarter of 2020, the net worth of US households rose another $3.82 trillion to a record $123.5 trillion.

As a percentage of Disposable Personal Income, total assets rose back to a near all-time high of 791% of DPI, while net worth was 696% of disposable income, also just shy of all time high.

As usual, the biggest swing factor was in the value of market-linked securities: in Q3, the value of directly and indirectly held corporate equities increased by $2.76 trillion due to the continued surge in stock prices (after the record $6.19 trillion increase in Q2),while the value of real estate held by households by a far more modest $430 billion. The high rate of personal saving also contributed to the increase in net worth, while the value of real estate held by households increased modestly. Homeowners’ real estate holdings minus the change in mortgage debt rose $288.3 billion (a positive value indicates that the value of real estate is growing at a faster pace than household mortgage debt).

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