Net worth for the average American family saw a significant surge during the pandemic, according to the Federal Reserve’s triennial Survey of Consumer Finances. This increase was primarily driven by higher home and stock prices, as well as government stimulus measures. After adjusting for inflation, median net worth jumped by 37% to $192,900 from 2019 to 2022, marking the largest percentage growth since the Fed started its modern survey in 1989. This growth was more than double the previous record increase of 18% between 2004 and 2007, before the Great Recession.
The report revealed that the increase in net worth was widespread among different types of families. Mark Zandi, chief economist of Moody’s Analytics, stated that “Americans got a lot wealthier during the pandemic.” This was largely due to the Federal Reserve’s decision to lower interest rates to near-zero at the start of the pandemic, making borrowing more affordable for consumers. Additionally, the expanded social safety net reduced the need for people to take on debt. The combination of government support and the anticipation of a quick economic recovery drove up asset prices, particularly stocks and homes.
However, it is important to note that not all families benefited equally from the increase in net worth. Assets like homes and stocks are typically not held by families in the bottom 20% by income. According to the Fed, families in the bottom 25% by wealth had a median net worth of $3,500 in 2022, while the top 10% had $3.8 million. Ted Jenkin, CEO and founder of oXYGen Financial, highlighted the widening wealth gap in America, stating that “those that have big net worths keep getting bigger, while those without net worths are not making much progress.”
The pandemic saw a massive influx of federal relief funds, such as stimulus checks, enhanced unemployment benefits, and child tax credits, which were issued to support households. The government also implemented measures to alleviate debt burdens, such as the pause on student loan payments and interest. As a result, the median balances of “transaction accounts” like checking, savings, and money market accounts jumped by 30% to $8,000 from 2019 to 2022. At the same time, the values of financial assets like homes and stocks saw significant increases.
For example, the median net value of a house rose by 45% to $201,000 in 2022, compared to $139,100 in 2019. The S&P 500 stock index also grew by approximately 20% between the end of 2019 and 2022. Additionally, the balances of typical retirement accounts, such as 401(k)s or individual retirement accounts, increased by 15% to $86,900.
Furthermore, more people began investing in stocks during this period. The Fed reported a marked increase in direct ownership of stocks, from 15% to 21% of families between 2019 and 2022, the largest change on record.
While the racial wealth gap narrowed over the three-year timeframe, with non-white families experiencing relatively greater increases in homeownership, stock ownership, and business ownership, significant disparities remain. The typical white family still possesses six times more wealth than the typical Black family and five times more wealth than the typical Hispanic family. The Fed also noted that Black and Hispanic families’ wages stagnated after adjusting for inflation between 2019 and 2022.
Despite these gains in net worth, many families continue to face financial difficulties. The poverty rate in 2022 increased to 12.4%, up 4.6 percentage points from 2021 and 0.6 points from the pre-pandemic rate in 2019, according to the Census Bureau. The expanded social safety net that was in place during the pandemic had largely diminished by 2022, coinciding with a surge in inflation. Household wealth likely peaked in mid-2022, and Mark Zandi predicts that if the survey were conducted today, net worth would be lower, particularly for those in the lowest income groups, due to higher levels of debt accumulated since the government support waned.
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