How much did US household net worth increase in Q1 2023?

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US Household Net Worth Saw a Significant Increase in Q1 2023

US household net worth experienced a substantial rise in the first quarter of 2023, increasing by over US$3 trillion to reach a total of US$148.8 trillion. This growth was primarily driven by a recovery in equity holdings and a notable increase in investments in debt securities, which helped to offset a decline in real estate values. Despite this recent increase, the overall net worth of US households remains below the record high achieved in the first quarter of the previous year.
Equity Holdings Drove Wealth Gains

The recovery in the stock market played a pivotal role in boosting household net worth. Holdings of equities saw an increase of approximately US$2.4 trillion during the first quarter of 2023. This surge in stock values contributed significantly to the overall wealth accumulation, reflecting a rebound in market performance after a downturn in the preceding year. The S&P 500 Index, for instance, experienced a 7 per cent gain in the first quarter, contributing to this upward trend.
Real Estate Values Declined

In contrast to the gains in equities, the value of real estate held by households saw a decrease. Real estate values declined by approximately US$600 billion in the first quarter of 2023, marking the third consecutive quarterly slide in this sector. This reduction in property values contributed to a broader decrease in household asset values, although its impact was outweighed by the gains in other asset classes.
Debt Securities Saw Record Increases

A significant contributing factor to the rise in household net worth was a record increase in the value of households' holdings of debt securities. This category saw a nearly US$550 billion increase, with a substantial portion of this growth attributed to a US$550 billion rise in holdings of Treasuries. This shift towards debt securities, particularly government bonds, reflects a strategy by households to capture higher yields in the prevailing interest rate environment.
Overall Net Worth Still Below Peak

Despite the strong performance in the first quarter of 2023, US household net worth has not yet recovered to its historical peak. Households are still down by nearly US$4 trillion from the record level of US$152.6 trillion recorded in the first quarter of 2022. This indicates that while there has been a significant recovery, the overall wealth position has not fully rebounded from previous declines.
Shift in Liquid Assets Observed

The data also indicated a shift in how households are holding their liquid assets. While cash near at hand, including bank deposits and money market mutual fund holdings, has declined by more than US$500 billion since early 2022, there was a notable increase in money market balances. Money market balances rose by US$300 billion in the first quarter to a record high of US$3.37 trillion, suggesting a movement of funds from traditional savings and time deposits to higher-yielding money market accounts.

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How much did US household net worth increase in Q1 2023?

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