Household wealth in the U.S. increased to a record last year as investors reaped the benefits of a surging stock market and higher home values.
Net worth increased by $11.6 trillion from 2022, or 8%, to $156.2 trillion, a report from the Federal Reserve showed on Thursday. The value of equities held directly and indirectly climbed about $7.8 trillion from a year earlier, and the value of real estate rose nearly $2 trillion.
The S&P 500 rallied in the fourth quarter to finish more than 24% higher on the year amid prospects that the economic expansion would remain intact despite tighter Fed monetary policy.
And although higher borrowing costs battered the residential real estate market, they also suppressed home listings and kept housing prices elevated.
Net worth in the fourth quarter increased by $4.8 trillion, or 3.2% from the prior three months, as the stock market climbed on expectations the Fed would begin lowering interest rates this year.
The Fed's report also showed that businesses dialed back their borrowing slightly at the end of last year as policymakers maintained tight policy in their battle against inflation. Business borrowing rose about an annualized $173 billion, the slowest pace since the third quarter of 2020.
Business debt outstanding increased at a 0.82% annualized rate. For all of 2023, business debt rose just 2.2%, the least since 2010, when it contracted in the aftermath of the Great Recession.
Consumer non-mortgage credit climbed by an annualized 3.3% in the fourth quarter. Meanwhile, mortgage debt also advanced at a slower rate. For all of 2023, mortgage debt rose the least since 2019.
Meanwhile, household liquidity continued to ease while remaining markedly higher than before the pandemic. Checkable deposits rose to more than $3.9 trillion. That's four times higher than in 2019, before the pandemic, and helps explain healthy growth in consumer spending.
