Despite warnings about the US economic recession, new data from the Federal Reserve show that Americans are now in the richest state ever. It can be said that they have never been so wealthy.
According to the latest Financial Accounts of the United States report released by the Federal Reserve on Thursday, as of the end of the second quarter, the cumulative net assets of Americans were $163.8 trillion, an increase of nearly 2% over the $161 trillion in the first quarter, mainly due to the continuous price rise in the US real estate market.
Specifically, the report states that the value of real estate increased by $1.8 trillion and the value of stocks increased by $700 billion, driving this growth. The US stock market hit a historic high in June, and the S&P/Case Shiller Home Prices Indices also reached a historic high.
In addition, with the increase of net assets, household debt increased by nearly 1% compared to the first quarter, reaching $20.2 trillion, while cash and cash like securities holdings slightly decreased to $18.44 trillion.
Overall, these data paint a healthy financial picture for American consumers, who have ample cash and hold large amounts of value-added assets. And American consumers are the strongest pillar of the US economy, which may also be one of the reasons why the US economy has remained resilient even after the Federal Reserve's significant interest rate hikes in the past two years, and the warned recession has not truly arrived.
Top American economist and President of Rosenberg Research, David Rosenberg, stated in a report last month that the strong spending data in July may be boosted by the "wealth effect," meaning that when consumers see their net worth rise, they will have the confidence to spend more money, and vice versa.
However, at the same time, he constantly warns that the possibility of the US economy falling into recession is increasing.
In the latest report, Rosenberg compiled 20 recession indicators, of which 9 have been triggered. Some of the recession signals that have already flashed include the Sam rule, the Leading Economic Indicator Index, and inverted yield curves. The indicators of decline in the manufacturing and transportation industries have not yet been triggered, and these two industries remain robust.
Currently, 45% of the economic recession indicators we track have been triggered. And since 1999, there has never been such a situation without a recession, "he added.
On the other hand, what drives American consumers is not only the constantly growing net worth, but also the constantly rising wages.
Data released by the US Census Bureau earlier this week showed that the median income of US households in 2023 increased by 4%, reaching a record high of $80610. This significant increase is the largest annual increase in income adjusted for inflation since 2019.
Therefore, overall, based on the latest economic data, the situation for American consumers seems to remain strong.