The Blubber

Per Reuters

US household net wealth has dropped by almost $7 trillion in the span of almost a year. The total household wealth fell from $150.1 trillion by the end of 2021 to $143.3 trillion at the end of September.

The wealth of Americans jumped in 2021 due to massive government financial relief during the COVID pandemic as the US government disbursed/committed a total of $11 trillion distributed among Administrative Actions, Legislative Actions, and Federal Reserve Actions, per Covid Money Tracker.

The approved stimulus bill in 2020 resulted in $5 trillion going to households, mom-and-pop shops, hospitals, local governments, schools, restaurants, airlines, and other institutions that suffered from the effects of COVID-19, per NYT. Brookings Institution economist Louise Sheiner stated how the money was used and its effect on individuals.

Sheiner: “What the money did was to basically make sure that when we could reopen, people had money to spend, their credit rating wasn’t ruined, they weren’t evicted and kids weren’t going hungry,”

A chunk of US household wealth was lost due to the stock market's performance, with the S&P 500 down by around 15% year-to-date, performing worse than it did during the 2008 global financial crisis, per Forbes. Over 95% of S&P 500 companies reported a 2.2% Q3 growth rate, down from a 10.7% Q2 growth rate, resulting in a record low since Q3 of 2020.

Despite the drop in performance for different sectors, energy stocks reported a 137% earnings growth in Q3 as the war in Ukraine caused complications in terms of natural gas and oil.

In Q3 alone, US household wealth has dropped by $400 billion. Despite real estate gains, wealth dropped due to the drop in US stock prices. This will be the third consecutive quarter of decline for US wealth.

US household cash stockpiles remained unchanged during the third quarter at around $18.4 trillion. Savings and time deposits declined as consumer checking accounts and money market balances both spiked.

Resources:

Reuters

Covid Money Tracker

The New York Times

Forbes

See flow at unusualwhales.com/flow.