The Chicago Journal

Americans’ Wealth Takes a Hit from Stock Market Collapse

America’s wealth took a massive dip thanks to the stock market’s continuous downward spiral.

The Federal Reserve Bank’s data on Thursday revealed that the net worth of households and non-profit organizations dropped in Q1, from $0.5 trillion to just over $149.3 trillion dollars. This is a notable turnaround compared with gains starting in mid-2020 when prices for homes went up, as well as equity stocks, doing well after being sold at higher rates.

The recent stock market movement reflects a sharp decline in the value of corporate equities, with $3 trillion lost from directly and indirectly held stocks. As a result, the holdings have a total value of $43.6 trillion.

The US stock market is in turmoil and there’s no sign of it letting up. The Dow Jones Industrial Average and the S&P 500 fell nearly 5% within the first three months, while the Nasdaq composite index plummeted nearly 9%. This makes this quarter one for all time lows since 2020 when the pandemic struck.

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The COVID-19 pandemic has been one of the most significant factors behind this economic downturn, but it’s not the sole factor. Oil prices have skyrocketed as well; inflation continues its upward trend with each passing day, and there were even some interest rate hikes by The Federal Reserve which might’ve had an effect on things too! In addition, Russia began their invasion into Ukraine,complicating matters further.

The Federal Reserve has released data that shows the rise in real estate values was a contributor to the stock market crashes, reaching a $1.7 trillion increase. The consistent high rate of personal savings also contributed to the decline.

The household net worth to disposable income ratio continues to be near its record high.  In addition, this figure is much higher than before pandemic levels were reached during 2019.

However, the Fed revealed the strong growth in home mortgages and consumer credit, leading to an annual pace of 8.3%.

Home prices continue to rise, mortgage debt increases by 8.6%. Americans are taking out more credit cards and auto loans in a bid for financial security, leading consumer credit to increase by 8.7%.

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Stock Market Among Other Factors to a Wealth Decline in Early 2022