American household wealth has hit a historic high, with savings accounts and equity portfolios seeing a big boost from federal pandemic relief and surging stock markets, according to a Federal Reserve report.
The $7.6 trillion jump from the prior quarter also is the biggest quarterly increase in history.
The wipeout included $8.29 trillion in corporate equity and $492 billion in debt securities, although real estate holdings rose in value by $422 billion.
Beginning in late February, as the CCP virus began spreading rapidly across the world, the benchmark S&P 500 equities index plunged 34 percent in the space of a month, but rebounded quickly and, by mid-August, it had recovered all of its losses. The Fed report shows that, in the second quarter, stocks and mutual funds saw a $5.7 trillion increase in value, debt securities rose by $67 billion, while real estate gained $458 billion.
Wealth also was boosted by a $700 billion increase in savings among households and non-financial businesses, many of which benefited from enhanced unemployment benefits. Household debt levels, meanwhile, grew at just a 0.5 percent annualized rate over the second quarter, the smallest increase since 2012.
The report reinforces the view that the quick mobilization by lawmakers and the Fed in March and April, including approval of small-business loans and $600 per week in extra unemployment insurance, threw a temporary safety net under much of the economy.
Many economists now fret that the expiration of small-business loans and the unemployment insurance boost that came as part of the pandemic relief package will force people to increasingly rely on their extra savings and, potentially, slow the economic recovery.