fbpx
March 14, 2022 Reading Time: 2 minutes

Household net worth rose to a new record in the fourth quarter of 2021. Household net worth totaled $150.3 trillion, up 3.7 percent or $5.7 trillion from the previous quarter, and 14.4 percent from the end of 2020 (see first chart). Total assets rose 3.5 percent to $168.6 trillion while total household liabilities increased 2.2 percent or $387.0 billion, to $18.4 trillion (see first chart).

Total assets consisted of $118.2 trillion of financial assets and $50.4 trillion of nonfinancial assets. The gain in total assets was due to a 3.4 percent increase in financial assets which contributed $3.9 trillion to the increase in net worth (see second chart). Within financial assets, equities led with a $1.6 trillion or 5.3 percent rise. Nonfinancial assets rose 3.7 percent, contributing $1.8 trillion to net worth (see second chart). Within nonfinancial assets, real estate had a 3.5 percent rise. The change in total liabilities was led by a $245.2 billion, or 2.1 percent, increase in mortgage debt to $11.7 trillion, while consumer credit increased $96.3 billion or 2.2 percent to $4.4 trillion (liabilities are shown as negatives; see second chart).

For the nonfinancial corporate sector, total assets rose 2.9 percent or $1.5 trillion, to $55.0 trillion while total liabilities rose 1.4 percent or $361.3 billion, to $25.6 trillion (see top of third chart). That puts the ratio of liabilities to assets at 46.5 percent, down from 47.1 percent at the end of the third quarter and two full percentage points below the 48.5 percent of the final quarter of 2020 (see bottom of third chart). The final quarter of 2021 is down from a recent peak of 49.5 percent in the first quarter of 2020 and close to the 45.8 percent midpoint of the 41.1 percent to 50.5 percent range since 1990 (see bottom of third chart again).

Overall, the data show that despite the damage done to the economy by the government lockdowns and severe recession in 2020, in aggregate, household balance sheets are relatively strong. Likewise, nonfinancial corporate balance sheets have improved somewhat over the last two years, suggesting a slightly lower level of risk. However, household net worth is likely to suffer a setback in the first quarter as equity market prices plunge in early 2022, largely due to the Russian invasion of Ukraine.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

Get notified of new articles from Robert Hughes and AIER.
AIER - American Institute for Economic Research

250 Division Street | PO Box 1000
Great Barrington, MA 01230-1000

Contact AIER
Telephone: 1-888-528-1216 | Fax: 1-413-528-0103

Press and other media outlets contact
888-528-1216
[email protected]

Editorial Policy

This work is licensed under a 
Creative Commons Attribution 4.0 International License,
except where copyright is otherwise reserved.

© 2021 American Institute for Economic Research
Privacy Policy

AIER is a 501(c)(3) Nonprofit
registered in the US under EIN: 04-2121305