American households have never been wealthier, says Fed data — but here’s why millions are still treading water

Financial optimism is shaky

Despite U.S. household wealth hitting a new record high — trumping the prior record of $152 trillion set in early 2022 — financial services giant Moody’s Analytics remains skeptical.

“Even with the recent gain, wealth is little changed over the past year, limiting its contribution to spending,” Moody’s economists wrote in a report cited by CNN. “Further, volatility in wealth since the onset of the pandemic will remind households of the fragility of any gains.”

U.S. households seem equally nonplussed. The New York Fed recently released the August 2023 Survey of Consumer Expectations, which found that households’ perceptions about their current financial situations and expectations for the future have deteriorated.

Specifically, the median expected growth in household income fell by 0.3% to 2.9% in August, — its lowest reading since July 2021 — and median household spending growth expectations fell by 0.1% to 5.3%.

Discover how a simple decision today could lead to an extra $1.3 million in retirement

Learn how you can set yourself up for a more prosperous future by exploring why so many people who work with financial advisors retire with more wealth.

Discover the full story and see how you could be on the path to an extra $1.3 million in retirement.

Read More

A debt and credit crisis

While the U.S. economy may have turned a corner and real estate values and the stock market rebounded — technically boosting the wealth of U.S. households — Americans are still feeling the sting of 11 interest rate hikes since March 2022 as the Federal Reserve has worked to tame rampant inflation.

U.S. household debt rose by $16 billion to reach $17.06 trillion in the second quarter of 2023, according to the New York Fed’s Quarterly Report on Household Debt and Credit, as people struggled to cope with inflation, elevated interest rates and the high cost of living.

Credit card debt specifically jumped by $45 billion to $1.03 trillion.

The majority of respondents in the New York Fed’s most recent consumer expectations survey said it was harder to get access to credit in August 2023 than it was a year ago — and most expect those challenges to continue.