Some Americans Saw Big Gains In Wealth During The Pandemic. Here's Why.

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A new report from the Federal Reserve suggests that many Americans have seen their wealth rise significantly during the pandemic, thanks to higher home prices and investments, as well as federal stimulus payments.

Median American household wealth — the average between the richest and poorest households — will rise 37% to $192,900 between 2019 and 2022, according to the Central Bank's Survey of Consumer Finances released Wednesday. The survey, published every three years, provides an overview of a household's financial health by examining income, assets and debt.

During the pandemic, millions of families saw their wealth increase as the value of their homes and investments increased. Even those who rent their homes and therefore did not see a dramatic increase in property values from 2019 saw their average wealth increase.

The recession caused by the pandemic was short and brutal, costing 20 million jobs. But many families have been helped with assistance such as accelerated rehabilitation, stimulus checks and supplemental unemployment benefits. The increase occurred across all ages, genders and education levels, the federation said.

The bank said in its analysis of the data that "categorized by economic or demographic characteristics, median increases and median net worth were universal across all types of households."

Despite a sharp interest rate hike by the Federal Reserve that makes buying a car more expensive, rising wealth for many families helps explain the economy's strength this year. Economists have warned that rising interest rates could push the US into recession, but that hasn't happened yet.

Many experts now believe that the United States will avoid a recession. The consensus among experts is that a recession in the next 12 months is now 48%, up from 54% in July, Goldman Sachs said in a research report on Tuesday.

Post-pandemic government payments have improved household finances. According to the Fed survey, the average value of checking, savings and other financial holdings rose 30 percent.

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With mortgage interest rates at historic lows, Americans will spend just 13.4% of their income on debt payments in 2022, the lowest percentage since the Fed began doing the research in 1989.

However, large wealth disparities persisted during the federal survey period, reflecting a decades-long gap between the wealthiest households and the rest. Among the richest 10% of households, the average wealth in 2022 will reach $3.8 million.

Black households have a median wealth of $45,000 in 2022, compared to whites who have a median wealth of $285,000, and gaps remain between some groups. The ethnic group with the highest median wealth is Asian American households, with a net worth of about $536,000.

The Fed noted that while wealth inequality fell during the pandemic, income inequality worsened. Between 2017 and 2019, median income increased by 3 percent compared to the previous survey.

But average income, equivalent to the income of the 10 richest households, rose by 15 percent. For wealthy families, big gains came from stocks and real estate, as well as rising wages.

- reports the Associated Press.