At the end of December, U.S. households measured a record net worth of $130.2 trillion, according to an 11 March report by the U.S. Federal Reserve.
Net worth is the difference between assets and liabilities.
The gain was driven by rising interest rates on bonds, housing prices that climbed 13 percent last year, and a soaring stock market that pushed up the S&P 500 by 12 percent in 2020’s final quarter.
Successive rounds of the federal stimulus also buoyed household income and spending through last year’s economic crisis.
The growth is likely to continue, aided by the new $1.9-trillion stimulus pouring into the economy.
After contracting 3.5 percent last year, the U.S. economy will expand by 5.95 percent this year, according to the average forecast of economists recently surveyed by the Wall Street Journal; a month ago, the prediction was for a 4.87-percent jump. Goldman Sachs now predicts a 7-percent rise.
The Organization for Economic Cooperation and Development pegs a 6.5-percent U.S. growth in 2021.
Household debt rose 4 percent last year, reaching $16.64 trillion, compared with a 3.2-percent uptick in 2019. Debt among U.S. businesses shot up 9.1 percent last year, the Fed noted, as companies borrowed to stay afloat through the global economic shutdown.
Federal debt layered on 24 percent, ending 2020 at $23.62 trillion, about 110 percent of 2019’s GDP of $21.43 trillion.
TRENDPOST: During her interview on ABC this past Sunday, U.S. Treasury Secretary Jane Yellen dismissed concerns regarding the unprecedented size of the federal debt: “In spite of the fact that the debt is increased substantially… interest payments relative to… the size of the economy has remained quite low, no higher than they were back in 2007,” she said.
While acknowledging that “in the longer run, we need to get deficits under control to make sure that our fiscal situation is sustainable,” Yellen left blank how the rocketing deficits would be controlled as the path forward indicates continuing flows of cheap money.
