Saul Loeb/AFP via Getty Images
Despite the economic upheaval caused by the pandemic, Americans’ household finances have improved overall in recent years, according to a new report. Survey from the Federal Reserve.
Between 2019 and 2022, the average household’s net worth rose 37%. This is the largest three-year increase since the central bank began conducting the survey three decades ago.
The survey also found that the wealth gap between the rich and the poor narrowed somewhat during that period. Temporary government relief measures linked to the epidemic may have contributed to widespread gains.
Job losses or covid bonuses have changed the family’s finances
Median household income also rose during the survey, but only by 3%, and most of that increase was concentrated among people at the top of the income ladder.
However, it is not the same for everyone. The income portion of the survey focused on 2021, when more than one in four households said their income was significantly higher or lower than usual. Early in the pandemic, many lost their jobs or left the workforce, while many who continued to work saw wages and bonuses related to Covid.
The central bank has conducted a survey of consumer finances every three years since 1989.
Fewer bankruptcies, more homeowners
Debt levels in the 2022 survey showed little change from 2019. But households were in a better position to pay off those debts than before, and the share of households filing for bankruptcy fell to just 1.3% over the past five years. 2% in 2019 and 3% in 2016.
Two-thirds of households will be homeowners in 2022—a slight increase from three years ago. Rising home values contributed to the gains in housing wealth during that period. But they created low-cost housing for those who wanted to enter the market.
By 2022, the average household will spend more than four and a half times the median household income. Affordability has worsened this year as home prices remain high and mortgage rates continue to climb.