The Federal Reserve’s latest Survey of Consumer Finances contains several revelations about the state of the American economy.

First, it found that the average American household’s net worth is over $1 million. Outliers can distort averages, of course, but even median household wealth is at the Fed’s highest level ever recorded. In 2019, it was still stuck below pre-Great Recession levels. By 2022, however, it had reached $192,000, eclipsing the 2007 mark by more than 10 percent, and almost doubling the post-Great Recession 2010 figure. (These and all subsequent data are adjusted for inflation.)

Income data complicate this rosy picture. The Census Bureau found that median household income has declined by almost 5 percent since 2019. That raises a question: How can median household wealth be up by 37 percent since 2019 at the same time median household income declined? 

Inflation over the past two years has cut household wage growth compared with pre-pandemic levels and made it harder for many families to put money into savings. Still, wealth has grown robustly in that span because the assets that Americans already owned in 2019 have dramatically increased in value.

For many households, their largest asset is their home. Median home-sale prices soared more than $130,000 between 2019 and 2022, which may not have made you feel wealthier—if you were shopping for a home, you may have felt poorer—but it boosted household balance sheets. Those benefits extended across the income distribution, too, since a slight majority of households in the bottom half of the income distribution own their home.

Home prices weren’t the only thing driving household-wealth growth. Despite its recent volatility, the S&P 500’s 2022 average was 37 percent higher than it was in 2019, meaning household retirement accounts were a lot fatter in 2022, too.

The Fed’s triennial survey also includes subgroup-specific data, which can shed light on some contentious political debates.

Let’s start with generational wealth. We often hear that millennials have it worse than their predecessors. Using the survey data, we can evaluate that claim.

In 2022, when the survey was released, Millennials were aged 26 to 41. To compare results across generations, take the respective years when Generation X (2006) and the Baby Boomers (1990) were also aged 26 to 41. Since the Fed’s survey is released every three years, 2007 and 1989 are the best comparison years for current millennials with older generations.

Because the Fed data don’t break out neatly by generation, we have to rely on its given age cohorts. The closest cohort in the Fed’s data is that aged 35 to 44 (which includes a few years of Gen X but is mostly millennials). This cohort’s median wealth was $135,000 in 2022, similar to the 2007 ($126,000) and 1989 ($130,000) figures.

We might look at that data pessimistically and say that today’s young people are no better off than their parents. But consider two things. First, wealth fell precipitously after the Great Recession—median wealth dropping to just $58,000 for ages 35–44 in 2010. Gen X’s high watermark was only temporary, and young people have been climbing back in the decade since the Great Recession.

Second, we need to look at one of the most divisive generational wealth issues in recent times: student-loan debt. Today, about 34 percent of those aged 35–44 hold such debt, with the median debtor owing $25,000. When Boomers were the same age, just 11 percent carried student-loan debt, with a median amount under $5,000, again adjusted for inflation.

The pessimistic interpretation is that Millennials are unfairly burdened with much more debt than in the past. The optimistic view is that because today’s young people are better educated, they will have higher lifetime earnings. According to the Census Bureau, over 40 percent of young people today have college degrees, compared with about 25 percent in 1989. College graduates still outearn other Americans, with a lifetime valuation close to $1 million in additional earnings. When interpreting wealth data over the lifecycle, we need to consider that more student debt means lower wealth at young ages, but likely higher wealth in old age.

Beyond generational inequality, the survey helps to define the nature and extent of racial wealth inequality. While a sixfold gap between white and black median household wealth endures, both races have seen significant wealth growth in recent years and saw  all-time highs in the Fed’s 2022 dataset. And because black household wealth grew much faster in the past three years (60 percent) than did white household wealth (31 percent), the racial gap has narrowed. Both black and Hispanic households have seen their inflation-adjusted wealth more than double since 2016. Asian American households have by far the greatest wealth among the racial groups identified in this survey, with a median household net worth of $500,000 and an average of $1.8 million.

These minority-group improvements do not merely represent regained losses from the Great Recession. Black median household wealth is 50 percent greater than the pre-Great Recession level in 2007; for Hispanics, it is double the 2007 levels. White households have a much higher median wealth than those of most minority groups but saw their wealth grow only about 16 percent after 2007.

Most of what I’ve reported so far is good news. Is there any bad news?

The survey reveals that those with lower levels of education are hurting. While those with college degrees have recovered their Great Recession losses and attained record levels of wealth, high school dropouts face bleaker prospects. Median wealth for high-school-dropout households is about $38,000, compared with $464,000 for those of college graduates. What’s more, dropouts’ household wealth is yet to recover to pre-2007 levels. Dropout-led households saw their wealth peak in the survey’s first year: 1989. Their inflation-adjusted wealth is much lower today than it was two generations ago.

Despite this sliver of bad news for high school dropouts, the wealth data from the Fed show that—thanks to rising home values, stock markets, and other asset classes since 2019—American households have record wealth across the distribution.

Photo by Khongtham/iStock


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