US Economy News: Americans Lost Billions In Wealth From $3T Stock Market Wipe Out

The Federal Reserve released data Thursday which showed Americans lost nearly $500 billion in household wealth for Q1 2022, marking the first time this has happened since the start of the COVID-19 Pandemic.

While Fed data showed household balance sheets did still rise $39 trillion above pre-pandemic levels, the overall fall was because of a stock market wipeout of $3 trillion and a rise in real estate value by $1.7 trillion. Specifically, household and non-profit wealth fell by over $500 billion, from $149.8 trillion to $149.3 trillion.

Household debt also increased at an annual rate of 8.3% to $18.3 trillion, something Forbes noted is the fastest pace of household debt growth since the Great Recession. Mortgage debt, excluding charge-offs, rose by an annual rate of 8.6%.

While the stock market and rising housing prices contributed to the wipeout of household wealth in the U.S., less than 60% of people in the U.S. own stock. As of 2021, only 79.36 million people out of the U.S. population of 329.5 million own houses and live in them. For most people, rising prices continue to be a major concern as inflation continues to climb.

The Consumer Price Index (CPI), released on Friday by the Bureau of Labor Statistics, reports that prices rose 8.6% in May over the last 12 months. This is the fastest pace since December 1981. This rise is largely driven by high food and energy prices.

Specifically, overall the energy index rose 34.6% from last year, the largest 12-month increase since September 2005. The energy index rose 3.9% for May while the gasoline index rose 4.1%. The "food index" rose by 10.1% over the last 12 months, which is the first time that the index increased by 10% or more since March 1981. That index also rose 1.2% in May while the "food at home" index increased 1.4%.

Minus food and energy, the CPI rose 6.0% over the last 12 months. Housing, airline fares, and both used and new vehicles were among the largest contributors to rising prices. Indexes for medical care, household furnishings and operations, recreation, and apparel also increased.