March 9 (Reuters) – Rising stock markets put wealth back into Americans’ pockets late last year, but falling property prices, slowing credit growth and declining corporate profits have pushed the Federal Reserve It could be an indication that the effects of the Board’s rate hikes are beginning to kick in. Grab.
The US Federal Reserve (Fed) reported Thursday that household net worth rose 2% to $147.71 trillion in the fourth quarter of 2022 from $144.78 trillion at the end of the third quarter. Equity holdings increased in value by $2.7 trillion, while real estate values decreased by about $100 billion.
Quarterly snapshots of U.S. financial accounts also show slowing credit growth among households and businesses as the year ended in the face of a sharp rise in interest rates engineered by the Fed in 2022. was showing
Total domestic non-financial debt increased at an annualized rate of 3% in the fourth quarter, down from 4.5% in the previous quarter and 8.8% in the same period last year. Household debt growth slowed to 2.3% annualized from 6.2% in the third quarter, while business debt growth eased to 3.6% from 4.3%.
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After hitting a record $151.9 trillion in the first quarter of last year, household wealth plummeted by more than $7 trillion in the second and third quarters as the Fed’s aggressive rate hike campaign sent equities into a bear market. Did.
The Fed has hiked interest rates by 4.5% since March last year as inflation, the highest in 40 years, abruptly ended a period of near-zero borrowing costs that prevailed during the coronavirus pandemic. is.
The benchmark S&P 500 Index (.SPX) posted a 7% recovery in the fourth quarter after falling about 25% in the first nine months of 2022, halting the overall decline in net worth. However, in 2021 wealth is down by about $4 trillion from his 2021.
The fall in property prices late last year was the first since 2012 and coincided with a year-long slump in the housing market, which stood out as the sector most affected by the Fed’s rate hikes.
Household cash reserves, ballooned from trillions of dollars in government-supported payments during the pandemic, have fallen modestly for the third straight quarter.
The combined value of checking and savings accounts, certificates of deposit and money market mutual funds fell to about $18.1 trillion from $18.3 trillion at the end of the third quarter, up from a record high of about $18.5 trillion in the first quarter. Decreased. Savings and term deposits fell to $10.4 trillion, the lowest level since the first quarter of 2020, but current account balances, aided by a strong job market, fell just below $5 trillion for the first time in three years. fell below
Federal Reserve data also suggest that some of the dynamics that policymakers have sought in fighting inflation, such as easing corporate profits, may be underway.
Business profits as a share of national income jumped to a high of 14.5% in the second quarter of 2021 during the pandemic and remained above 14% earlier this year. By the end of the year, it had fallen to 12.8%, comparable to pre-pandemic levels. The share of national income spent on employee wages and benefits rose to 63.3% at the end of the year.
Reporting by Dan Burns and Howard Schneider.Edited by Deepa Babington and Andrea Ricci
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