Wealth for the median household — the midpoint between the richest and poorest households — jumped 37% during those three years to nearly $193,000, the Federal Reserve reported in its Survey of Consumer Finances. (The figures are adjusted for inflation.)

The increase reflected primarily a jump in home values and higher stock prices and a rise in the proportion of Americans who own homes and stocks. One in five households owned stocks directly at the end of 2022, while surging real-estate prices brought home values to record highs.

The jump in wealth occurred even as the brief but brutal pandemic recession cost 20 million Americans their jobs in 2020. Extensive government relief aid, totaling about $5 trillion, helped spur a rapid recovery that regained the lost jobs much faster than had been true after the 2008-2009 recession. The additional spending, though, is believed to have helped fuel the worst bout of inflation in four decades.

The broad-based wealth increase helps explain the surprising durability of the U.S. economy this year and the consumer spending that powers about two-thirds of it. For at least a year, economists have been warning of a forthcoming recession. Yet the economy has kept chugging along.

Economic growth in the just-completed July-September quarter may have topped a robust 4% annual rate, boosted by strong consumer spending for physical goods as well as for services, a broad category that includes airline travel, entertainment, restaurant meals and other experiences.

Government-provided stimulus payments in the aftermath of the pandemic also boosted households’ finances. The median value of checking and savings accounts and other cash holdings surged 30%, according to the Fed’s survey, which it conducts every three years. And with borrowing rates historically low, Americans dedicated just 13.4% of their incomes to paying off debt in 2022, the lowest such proportion since the Fed survey began in 1989.

Asset bubbles

Surging housing values were another factor, with Americans’ median “net housing value,” or the value of a home minus the debt owed on it, reaching a record $201,000 in 2022, up 44% from 2019. At the same time, the Fed wrote, “affordability fell to historic lows, as the median home was worth more than 4.6 times the median family income.”

And more Americans bought individual stocks after the pandemic — a likely reflection, in some way, of the “meme stock” craze that was fueled partly by stimulus checks. The proportion of families that owned stocks directly, as opposed to through mutual funds, jumped from 15% to 21%, a record increase, the survey found.

The median value of individual stock holdings was $15,000, the Fed report said. The average value of direct stock ownership was much higher — $404,000 — the survey found, reflecting the holdings of richer families.

Substantial wealth inequality remained in place during the survey period, reflecting decades of widening disparities between the richest households and everyone else. Among the wealthiest 10% of households, median wealth reached nearly $3.8 million in 2022.

Household net worth rose more, on a percentage basis, for Black and Hispanic households than for white ones, though measured in dollar terms the disparities remained wide. The median net worth of Black households jumped 60% but remained comparatively low at $45,000. For Hispanics, the figure surged 47% to nearly $62,000. Among white households, median household net worth rose 31% to $285,000.

The Fed’s survey found that even as wealth inequality declined, income disparities worsened. Median incomes grew 3% compared with the previous survey in 2019. But average incomes, which are swollen by the earnings of the wealthiest one-tenth of households, jumped 15%. The outsize gain among the richest households was driven by profits on stock and property holdings as well as higher wages.

Yet the income data was also more complicated than usual in this report, Fed officials noted. It did not, for example, capture the effects of stimulus checks. And the report focused on incomes in 2021, when many Americans were still grappling with job losses from the pandemic recession.